Air France-KLM Agrees Cargo Agreement with French Shipping Firm CMA CGM

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PARIS – French shipping firm CMA will take a stake in CGM Air France-KLM as part of an air cargo partnership, betting on growing demand for flying products around the world as the supply chain is gripped by an epidemic.

CMA CGM will take up to 9% of Air France-KLM, part of the potential capital increase by the airline group, for the duration of their partnership, which is initially set to run for 10 years, the two companies said.

This will make CMA CGM the fourth largest shareholder, according to refinitiv data, and reflect a similar initiative planned by shipping company MSC, which has teamed up with Germany’s Lufthansa for a potential bid for Italian airline ITA.

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Air France-KLM shares rose nearly 3% in early trade, making it the top performer on the Paris SBF-120 equity index.

Marseille-based CMA CGM, one of the largest container shipping lines in the world, established an air cargo division last year as part of a push to develop non-maritime logistics.

Increasing profits for sea shipping associated with high freight rates from the COVID-19 epidemic has allowed CMA CGM and other shippers to invest in other types of transportation to add resilience to the global supply chain and protect against recession.

CMA CGM, privately owned by the Sade family, last month acquired auto transport company Gefco, which was co-owned by Russian Railways (RZD) and carmaker Stalantis.

Air France-KLM and CMA CGM said their partnership was expected to generate “significant revenue adjustments” and said they had “strong ambitions to invest and grow sustainably” in the air freight market.

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The partnership with Air France-KLM includes a combined fleet of 10 full-cargo aircraft, including four CMA CGM Air Cargo and six Air France-KLM. Together, they have 12 aircraft in their order.

It also covers Air France-KLM’s Belly Aircraft Capacity, which covers cargo carried on the airline group’s more than 160 long-haul passenger aircraft.

Air France-KLM competes in the cargo market with European carriers, including Lufthansa and freight specialist Cargolax, as well as major Gulf and Asian carriers.

According to the International Air Transport Association, the separate network of Air France, KLM and Martiniere – a partner of the group – ranks the group eighth in the global league table of cargo airlines by traffic.

Air France-KLM’s major shareholders, including the French and Dutch governments, backed CMA CGM at the company’s next board meeting on May 24, the partners said.

The tie-up is subject to anti-trust approval. (Reporting by Tim Heffer; Editing by Josephine Mason and Edmund Blair)

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