CMA CGM - comment
In the last year, CMA CGM has done its best to position itself as a French industrial champion. CMA moved its tax domicile to France, froze spot rates and has now publically promised to become a shareholder in Air France as part of a deal to combine air freight operations in a 10-year exclusive commercial partnership. The freight cooperation agreement will transform CMA CGM’s air freight capability whilst further embedding itself into French industrial policy will be useful when the next economic downturn (and freight rate collapse) happens.- Air France intends to raise €1bn in equity and €3bn in quasi-equity instruments. As part of this exercise, CMA CGM may take a 9% stake in Air France. The cost is likely to be up to €315m (9% of current market cap €2.5bn plus €1bn additional => ~€315m). Air France will raise up to €1bn in equity whilst simultaneously converting the remaining €3bn in state aid to a perpetual hybrid bond to be taken by the French State. This has been approved by the EU.The Dutch government is discussing a similar capital strengthening operation for KLM.
- CMA CGM will combine its four freighters (with eight more on order) with Air France’s six (with four more on order). Additionally, the deal will cover the belly capacity of Air France’s 160 aircraft long haul fleet.
CMA CGM - Press Release re strategic cargo partnership with Air France