Air France-KLM weighs fresh fundraising as losses mount

Air France-KLM is considering raising more capital to repair its battered balance sheet as the struggling carrier counts on a summer air-travel resurgence to stem losses. Equity and quasi-equity financial instruments are being studied, the airline said Thursday as it reported a wider Q1 operating loss of E1.2b. Shareholders will be asked later this month to approve proposals that would potentially raise billions of euros. The action could help lower long-term debt that totaled E14.2b at the end of Q1, levels that CEO Ben Smith has said were “holding back our balance sheet.” He signaled last month that a further recapitalization may be necessary after the airline group’s latest rescue from the French government. In the coming months, Air France-KLM is counting on global vaccination campaigns to revive consumer demand for travel. It set plans to increase capacity this quarter and next, an approach that analysts say carries risk. In a sign that airlines remain uncertain about how fast demand will recover, rival Swiss said Thursday it would pare back its fleet and cut more jobs. “Air France-KLM continues to plan a capacity return faster than peers,” Bernstein analyst Daniel Roeska wrote in a note, saying that this risks diluting fares and incurring unnecessary expense. “While liquidity resources are currently high, they are draining quickly.” Air France-KLM said losses this quarter would be on a par with the previous three months, when restrictions on movement remained and empty planes fueled cash burn.<br/>