Air France-KLM bond issue lands amid rising risks to summer fun

Airlines are rushing to the bond market, hoping to cash in on the return of summer travel in Europe to repair balance sheets broken by the pandemic, even as a deadly wave of virus variant threatens to strand tourists. Carrier Air France-KLM is set to raise E600m Thursday to pay down debt including some state aid, as it tests the limits of investor appetite for an industry subsisting off government support and a reopening trade threatened by the spread of the delta variant first identified in India. “The Dutch and French state have basically done everything they can to keep the company afloat which will also give investors a bit of comfort,” said Shanawaz Bhimji, fixed income strategist at ABN Amro Bank NV. “The yield is quite generous.” Even as Europeans flock back to their beaches and welcome Americans, German Chancellor Angela Merkel sounded a note of caution, urging for coordinated rules for travellers arriving in the European Union from areas where variants are spreading. Wide-open credit markets are all the encouragement beleaguered airlines need to extend their dash for cash. They’ve issued a record 15 billion euros of bonds and loans so far this year, double the previous six months’ tally and only E4b short of all of last year, according to data compiled by Bloomberg. The borrowing binge means the industry is now sitting on a debt pile of almost E50b, with about 70% incurred since the pandemic hit last year.<br/>