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Air France-KLM is turning to a much-debated part of the ethical bond market to repay state aid that helped it weather the coronavirus pandemic. The airline is presenting its sustainability-linked financing framework to investors from Wednesday, and will then offer at least E300m of sustainability-linked bonds, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. The proceeds will be used to partially repay a senior bank loan granted by France in May 2020, the person said. Sustainability-linked bonds, or SLBs, are a relatively new part of a $5.6t ethical debt market that grew rapidly for a decade before slowing amid the market turmoil of 2022. The ESG bond market has also faced increasing scrutiny about how much meaningful impact it has on tackling climate change. SLBs — which saw a tenfold growth in global issuance over 2020-2021 — have become particularly controversial, criticized for weak targets and small penalties and even being eschewed completely by some of the world’s largest ESG bond investors. Unlike green or social bonds that can only be used to fund specific projects, SLB proceeds can be used for just about anything, with companies including Tesco and Carrefour coming under fire for the soft targets tied to theirs. Air France-KLM has a sustainability plan that includes a reduction of direct and indirect emissions as it works toward a goal of achieving net zero by 2050. To achieve this, it plans to renew its fleet and use sustainable aviation fuels.<br/>

Air France-KLM announced on Wednesday three management changes for its low-cost company Transavia and regional airline HOP!. Herve Boury, currently COO at Transavia France, will replace Olivier Mazzucchelli at the head of HOP!. Mazzucchelli will replace Nathalie Stubler as chief executive officer of Transavia. She is set to become special adviser to the group’s decarbonisation strategy. “These appointments will be effective as of January 16, 2023”, the group said in a statement. <br/>

Kenya’s Capital Markets Authority has granted a year-long suspension of share trading in Kenya Airways to give the SkyTeam carrier more time to complete its restructuring. The notice from the authority extends for 12 months the suspension in trading until 5 January 2023. Kenya Airways originally requested the suspension in the trading of its shares in the summer of 2020 as part of restructuring amid the Covid-19 pandemic. Kenya Airways’ ongoing restructuring has included reducing its network, trimming back and renegotiating deals with aircraft lessors, as well as seeking labour savings. Progress on the latter has been harder to achieve and notably relations with pilots soured during strike action, which only ended in November following a labour court intervention. A fresh report from the International Monetary Fund, which signed off fresh financial support to Kenya in December, flagged that in addition to taking over $827m of Kenya Airways debt, the Kenyan government would provide $473m in support to the carrier over the current and previous financial year to clear overdue payment obligations and cover the upfront costs of restructuring.<br/>

Garuda Indonesia plans to “maximise business performance momentum” following its exit from restructuring, tapping into opportunities in the cargo and religious pilgrimage markets. The airline, which completed restructuring at the end of 2022, is also targeting to operate 66 aircraft this year, in addition to another six aircraft it already owns. It is a slight increase over previous estimates of 70 aircraft by end-2023. The disclosure comes as the Indonesia Stock Exchange lifts a trading suspension on Garuda shares, a move airline chief Irfan Setiaputra calls a “positive step” in the carrier’s path to recovery. In a 3 January statement, Setiaputra says: “With an increasingly solid foundation of business performance that is also supported by an increasingly lean and adaptive cost structure…we are optimistic that Garuda can maximise the momentum [in] reviving business performance.” On network, Garuda says it will continue to build up a multi-hub strategy, by “strengthening flight connectivity” to points in the network with strong passenger demand, from “strategic” hubs like Jakarta, Denpasar Bali, as well as Kualanamu Medan. Setiaputra also says the airline will double down on cargo, which he notes will “help maximise the growth momentum of the national export sector”. “We will strengthen this commitment by developing a cargo flight network for both charter and scheduled flights to support direct call activities to various national export destination countries,” says Setiaputra. Lastly, the airline will focus on growing market share in the charter segment, specifically on religious pilgrimage operations, known as Umrah. Calling it a “promising market”, Setiaputra says Garuda intends grow the number of direct flights between Indonesian cities and pilgrimage sites in the Middle East. The airline undertook a massive restructuring exercise that spanned most of 2021 and 2022. On 22 December it received a crucial payment from the Indonesian government, which it will use for operational needs. <br/>