Air France-KLM considers cap hike delay as Omicron disrupts travel - sources

Air France-KLM is considering delaying its planned capital increase because of tough travel restrictions imposed by governments to mitigate the spread of the Omicron variant of the coronavirus, two sources familiar with the company's plans told Reuters. The French-Dutch carrier was hoping to raise at least E1b by the end of the year to shore up its heavily-indebted, pandemic-hit balance sheet and repay government aid, but this is now likely to be delayed, the two sources said, speaking on condition of anonymity. "The mathematics of it doesn't work. They need to sell a recovery story and that doesn't work with Omicron hovering," said one of the sources. Air France-KLM declined to comment. The United States, Japan, Hong Kong and a number of European countries are among those to have tightened borders and imposed new restrictions amid uncertainty around the virulence of the new variant and its ability to evade vaccine protection. Shares in travel companies around the globe have plummeted since news of the variant emerged, with British Airways-owner IAG down almost 15% since Friday and Lufthansa and Air France-KLM down around 9%. The airline already completed a E4b recapitalisation package in April which included state support and a E1.036b rights issue that doubled the French government's stake to 30%. It had more than E10b of cash at hand at the end of September and can afford to delay the plan. Yet, it needs to reimburse state aid to lift a EU ban on merger and acquisition deals, a source at the French government said. Air France-KLM's CE Ben Smith said at the end of September the company was aiming to raise new funds "as soon as possible", without providing an exact date. <br/>