Apollo has closed an agreement for Apollo-managed funds and affiliated entities to make a €500 million investment into an Air France operating affiliate owning a pool of spare engines dedicated to the airline’s Engineering and Maintenance activities. Proceeds from the transaction allow Air France-KLM and Air France to further redeem the French State perpetual bonds provided as State aid due to the COVID-19 outbreak.
The bespoke transaction, according to Apollo, was a unique opportunity to provide a leading airline with a custom, asset-backed capital solution to deleverage and improve its borrowing costs. Apollo noted that it had leveraged its cross-platform expertise, including in aviation, asset-backed finance and multi-asset credit to execute the long-term investment.
Gary Rothschild, Head of Aviation Finance and Partner at Apollo and CEO of Merx Aviation, commented: “Following up on our sale-leaseback with Air France of two Boeing 777Fs last year, we are pleased to once again partner with Air France on another significant financing with respect to the airline’s pool of spare engines. This innovative structure shows once again the extensive capabilities Apollo can bring to our airline customers globally with our unique combination of a full-service aircraft leasing platform combined with flexible and creative capital and structuring solutions. We are proud to continue to grow our relationship with Air France-KLM.”
Apollo Partner Jamshid Ehsani added: “Apollo is pleased to serve as a long-term strategic capital partner to Air France-KLM and is uniquely positioned to provide custom capital solutions like this to some of the world’s leading companies. Our ability to structure creative, scaled solutions at a wide-range of capital costs differentiates us from other platforms and provides attractive investment opportunities for both affiliated and third-party insurers as well as other institutional clients.”
Milbank and Jeantet served as legal counsel to the Apollo Funds. Deutsche Bank and Skadden, Arps, Slate, Meagher & Flom acted as exclusive financial and legal advisors, respectively, to Air France-KLM.