Shipping group CMA CGM acquires airline Air France-KLM: The merger with CMA CGM could help Air France-KLM become a world leader in air cargo transportation.
The M&A trends in airways after the pandemic is witnessing a big deal. Air France-KLM and major French container shipping company CMA CGM announced on May 18, 2022, the signing of a "strategic partnership" to jointly exploit air freight capacity. As a result of this cooperation, the world's third-largest container ship operator will become a shareholder of Air France-KLM company to hold up to 9% of the capital. This investment could be part of a capital raise by Air France-KLM, which the airline is considering in an announcement made on February 17, 2022). With a 9% stake, CMA CGM will become the 4th largest shareholder after the French government (28.6%), China Eastern (9.6%), and the Netherlands (9.3%). They will surpass Delta Airlines, which currently holds a 5.8% stake.
The two companies' freight partnership exemplifies the business's resurgence in the wake of the pandemic. In 2020 and 2021, consumers are more accustomed to ordering via the Internet and boosting the demand for e-commerce goods transportation by air. By shipping millions of e-commerce packages, they can even pay the fixed costs of flights and save the airline from bankruptcy when many passenger flights have to be shut down.
The boom in this freight segment has previously gone unnoticed by CMA CGM. More than a year ago, in February 2021, the airline ended its merger with the Dubreuil group, the owner of Air Caraïbes, and the French Bee. At the time, the company was discussing buying shares in the capital of the two airlines but later closed the deal. They catered for their own needs using their own CMA CGM Air Cargo air freight company and purchased four Airbus A320s.
For Air France-KLM, the arrival of the CMA CGM came as a surprise. Trapped by the pandemic, this airline had to receive government support to survive. With a loan of 7 billion euros, Air France-KLM is still not out of trouble. To reduce debt, the company still needs to be refinanced and wait for another 4 billion euros. This is not a good time to get a reasonable share price, even if the trend of mergers and acquisitions in the aviation sector is more prevalent in the world.
To get the green light of the European Commission for direct government loans in times of crisis, Air France-KLM has pledged to take no more than 10% of a competitor's capital until it has repaid 3 /4 of its loan. With only 500 million euros returned to the government, the group is far from this figure. A boost from CMA CGM funding could enable the airline to overcome this challenge. In particular, this could help the airline to participate more actively in the takeover of Ita Airways in association with Delta Airlines.
Source: https://logistics.gov.vn/dich-vu-logistics/van-tai/thi-truong-van-tai-hang-hoa-hang-khong-toan-cau-sap-co-hang-hang-khong-lon-nhat
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