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Dutch government says accepts dilution of Air France-KLM stake

AMSTERDAM, April 6 (Reuters) - The Dutch government said on Tuesday that it accepts a reduction of its 14% stake in Air France-KLM under a deal announced between the company and the French government.

France will contribute up to 4 billion euros ($4.7 billion) to a recapitalisation of the airline, more than doubling its 14.3% stake in the airline group.

In a letter to parliament, Dutch Finance Minister Wopke Hoekstra said the government has agreed to allow its stake to be diluted to 9.3%.

“This change in shareholder proportions has no consequences for the preservation of public interests,” he wrote.

The government purchased the 14% stake in Air France-KLM in a surprise move in 2019, aiming to give The Hague more influence over the company’s strategy. But then the coronavirus pandemic hit, bringing international travel to a virtual standstill.

In a first round of COVID-19 related support last year, France gave Air France-KLM 7 billion euros, while the Netherlands provided 3.4 billion euros in loans and loan guarantees only to KLM.

The Dutch subsidiary said in a statement on Tuesday it will eventually need additional capital, without defining how much, while Hoekstra said KLM had no acute need for cash but the government was looking at “the necessity of a recapitalisation and the conditions”.

France has agreed with the European Commission that Air France must surrender 18 slots at Paris-Orly Airport in exchange for receiving state aid, but the Dutch government is still in talks over what conditions will be attached to its support for KLM at its base at Schiphol Airport.

Hoekstra said that the Dutch interest is in keeping Schiphol’s intercontinental routes operating and KLM is “essential” to that.

Reporting by Toby Sterling; Editing by Kirsten Donovan

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