Apollo Invests More Into AFI KLM E&M

The investment will go into an Air France affiliate owning a pool of components.

Credit: AFI KLM E&M

Apollo Global has said its latest financing for Air France-KLM will support future component purchases for maintenance at Air France Industries and KLM Engineering & Maintenance (AFI KLM E&M).

The extra €500 million ($560 million) investment by Apollo-managed funds will be converted into perpetual bonds that bear interest of 6.9% for the first three years, and Air France will have the ability to redeem them at any time after three years.

The investment will go into an Air France affiliate owning a pool of components—a similar structure to last year’s deal for Apollo to invest €500 million in “an operating affiliate of Air France, owning of a pool of spare engines of Air France dedicated to its engineering and maintenance activity.”

While both deals will help fund maintenance spending, Air France-KLM will also use both to strengthen its balance sheet. 

Apollo Partner Jamshid Ehsani said: “Apollo is pleased to continue to serve as a long-term strategic capital partner to Air France-KLM, indicative of our ability to provide custom capital solutions like this to some of the world’s leading companies.”

The asset manager has been busy within the aviation sector this year, with rumors circulating that it will buy the aviation debt book of Standard Chartered, a bank that is seeking to offload its air finance business. It also started executed sale and leaseback transactions for Embraer E2 aircraft.

Air France-KLM stressed that its deal will “incur no change of ownership, operational and social aspects of Air France Engineering and Maintenance activity.”

It added: “There will be no change in the way Air France uses the components and executes the maintenance contracts, and no impact on Air France or Air France-KLM employees’ contracts.”

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.