Air France-KLM and KLM Secure Sustainability-Linked Credit Facilities

Air France-KLM and its subsidiary KLM Royal Dutch Airlines have successfully extended their sustainability-linked revolving credit facilities, demonstrating their commitment to environmental goals. The credit facilities, totaling €2.8 billion, are now linked to sustainability performance targets.

The Air France-KLM holding company and KLM each signed a €1.4 billion revolving credit facility , replacing their existing undrawn facilities from May 2020. The new facilities have a 3-year tenor with two one-year extension options, potentially extending the duration to 5 years.

A key feature of these credit facilities is their alignment with Air France-KLM's sustainability objectives. The facilities incorporate a pricing adjustment mechanism based on the achievement of specific sustainability key performance indicators (KPIs). These KPIs include the reduction of CO2 emissions per passenger kilometer and the increase in sustainable aviation fuel (SAF) incorporation.

Why this matters: The linking of credit facilities to sustainability targets reflects the growing importance of environmental, social, and governance (ESG) factors in corporate financing. It showcases Air France-KLM's commitment to reducing its carbon footprint and transitioning towards more sustainable operations in the aviation industry.

By tying the credit facilities to sustainability KPIs, Air France-KLM aims to incentivize and accelerate its efforts in reducing CO2 emissions and increasing the use of sustainable aviation fuel. The company recognizes the critical role it plays in addressing climate change and the need for the aviation sector to adopt more environmentally friendly practices.

The extension of these sustainability-linked credit facilities provides Air France-KLM with financial flexibility while aligning its financing strategy with its sustainability goals. It demonstrates the company's proactive approach in integrating ESG considerations into its business operations and financial decision-making.

Air France-KLM's Chief Financial Officer, Steven Zaat, emphasized the significance of this move, stating, "Linking our financing strategy to our sustainability targets is a logical next step in our actions to achieve a more sustainable future for our industry."

Key Takeaways

• Air France-KLM and KLM extend €2.8B sustainability-linked credit facilities.
• Facilities linked to CO2 emissions reduction and sustainable aviation fuel targets.
• Demonstrates commitment to environmental goals and ESG integration in financing.
• Provides financial flexibility while aligning with sustainability objectives.
• Signals growing importance of ESG factors in corporate financing decisions.