Air France Rules Out Early Capital Increase


Air France Rules Out Early Capital Increase - Sky Today

Air France Rules Out Early Capital Increase - Sky Today

Air France on Friday ruled out a capital increase any time soon as fresh union protests kept the focus on the airline’s plans to cut costs and restore a weak balance sheet.

The chief executive of the French arm of Europe’s largest airline by revenues dismissed a report that auditors had given the French carrier two years to gain a new injection of equity.

“A capital increase is not at all on the agenda,” Alexandre de Juniac said, saying the company was solely focused on a plan to overhaul its cost base called Transform 2015.

The former finance ministry official was speaking on the sidelines of a Paris airports news conference held behind a cordon of French riot police as ground staff staged sporadic strikes ahead of a meeting of the airline’s employee council. There were no reports of significant disruption.

De Juniac declined to comment on the measures to be outlined to employees, which specialist website Air Journal said would include the cancellation of some clauses of existing contracts.

Parent group Air France-KLM, formed from a merger of French and Dutch flag carriers in 2004, is implementing a restructuring plan after posting a net loss of EUR€809 million in 2011.

Unions fear the plan could lead to job losses once French presidential elections are out of the way in May.

La Tribune newspaper reported on Tuesday that auditors had given Air France two years to recapitalise the airline to improve the ratio of shareholder equity to share capital.

A company spokeswoman said the report reflected discrepancies between international accounting rules and French standards applied to the Air France business.

Shares in Air France-KLM, 15.8 percent owned by the French government, rose almost 1 percent on Friday, slightly outperforming the Paris market. Over the past 12 months, the shares have slumped 64 percent compared with a European travel and leisure sectoral index which has been roughly flat over the same period.

Air France and airports operator Aeroports de Paris set out plans on Friday to narrow the gap with London Heathrow as Europe’s largest airport by expanding and reorganising services at Charles de Gaulle, the region’s second busiest.

ADP plans to open a new terminal called S4, dedicated solely to departures of long-haul flights for Air France and other Skyteam members, before the summer peak.

The EUR€580 million facility, which is currently France’s biggest construction site, will be able to handle 7.8 million passengers a year and will include gate facilities for 16 wide-body aircraft including 7 Airbus A380 superjumbos.

ADP chief executive Pierre Graff said Charles de Gaulle, north of Paris, had a “competitive edge” over its rivals because of unlimited available space and four runways. Heathrow has two main runways and is embroiled in a UK political debate over whether to expand the airport to relieve congestion.

UK media reports at the weekend suggested Conservatives in Britain’s coalition government could review a decision to block the construction of a third Heathrow runway, opposed by coalition partners and airport noise lobby groups.


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