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    600115   CNE000000TR0

CHINA EASTERN AIRLINES CORPORATION LIMITED

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Air France to boost China Eastern venture after share issue

04/12/2021 | 05:13pm EDT
FILE PHOTO: The coronavirus disease (COVID-19) outbreak in Amsterdam

PARIS (Reuters) -Air France-KLM will expand its partnership with China Eastern Airlines, as the Chinese carrier contributes to a 1 billion-euro ($1.2 billion) share issue heavily backed by the French government, the airline group said on Monday.

The French state will cover as much as two-thirds of a 988 million-euro capital increase by Air France-KLM, more than doubling its stake to nearly 30%, while 8.8% shareholder China Eastern invests up to 168 million euros to maintain or slightly increase its stake, subject to a 10% agreed cap.

The share issue, which may rise to 1.14 billion euros with an increase option, is part of a 4 billion-euro recapitalisation announced last week - the latest move by a major airline group to shore up finances after more than a year of COVID-19 travel shutdowns and deep losses for the sector.

The new shares will be priced between 4.84 euros and Monday's closing price of 5.31 euros, which valued the group at 2.27 billion euros.

The operation sees France and China Eastern increase their sway over the Franco-Dutch group - while diluting the holdings of the Dutch state and U.S. carrier Delta Air Lines, currently at parity with China Eastern. Delta was barred from investing by conditions on its own U.S. federal aid.

In parallel, Air France-KLM said on Monday it will expand code-sharing operations with China Eastern to include flights linking Beijing to Paris and Amsterdam once traffic recovers.

The expansion was agreed "in the context of the participation of China Eastern" in the capital hike, it said. Until now, their joint venture was limited to Shanghai flights.

They also plan to extend cooperation into new areas such as ground services, catering and maintenance, Air France-KLM said.

The group gave details of an accompanying 3 billion-euro perpetual bond issue to the French government, replacing the shareholder loan it received last year.

The issue will take place in equal 1 billion-euro tranches with four-, five- and six-year redemption options bearing respective interest rates of 7%, 7.25% and 7.5%, subject to additional step-up margins after the redemption dates.

($1 = 0.8403 euro)

(Reporting by GV De Clercq and Laurence Frost in ParisEditing by Dan Grebler and Matthew Lewis)

By Geert De Clercq and Laurence Frost


© Reuters 2021
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Financials
Sales 2021 93 253 M 14 503 M 14 503 M
Net income 2021 -1 864 M -290 M -290 M
Net Debt 2021 166 B 25 839 M 25 839 M
P/E ratio 2021 -32,7x
Yield 2021 -
Capitalization 57 134 M 8 904 M 8 885 M
EV / Sales 2021 2,39x
EV / Sales 2022 1,64x
Nbr of Employees 81 157
Free-Float 22,2%
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Number of Analysts 16
Average target price 5,68 CNY
Last Close Price 5,10 CNY
Spread / Highest target 38,2%
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Spread / Lowest Target -51,0%
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Yang Min Li Vice Chairman, President & General Manager
Zhou Qimin Chief Financial Officer & Vice President
Shao Yong Liu Chairman
Lijun Guo Chairman-Supervisory Board
Rui Qing Shao Independent Non-Executive Director
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