Obligation Air France-Klm 3.875% ( FR0014004AF5 ) en EUR

Air France-Klm

99.17 % ▲

France

FR0014004AF5 ( en EUR )

3.875% par an ( paiement annuel )

30/06/2026

Prospectus brochure de l'obligation Air France-Klm FR0014004AF5 en EUR 3.875%, échéance 30/06/2026

100 000 EUR

500 000 000 EUR

01/07/2024 ( Dans 42 jours )

L'Obligation émise par Air France-Klm ( France ) , en EUR, avec le code ISIN FR0014004AF5, paye un coupon de 3.875% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 30/06/2026

PROSPECTUS DATED 29 JUNE 2021

Air France-KLM SA
(incorporated as a société anonyme in France)
500,000,000 3.875 per cent. Notes due 1 July 2026
Issue price: 99.444 per cent.
300,000,000 3.000 per cent. Notes due 1 July 2024
Issue price: 99.647 per cent.
The 500,000,000 3.875 per cent. Notes due 1 July 2026 (the 2026 Notes) and the 300,000,000 3.000 per cent. Notes due 1 July 2024 (the 2024 Notes and together
with the 2026 Notes, the Notes) are to be issued by Air France-KLM (the Issuer or Air France-KLM) on 1 July 2021 (the Issue Date).
Each 2026 Note will bear interest on its principal amount from (and including) the Issue Date to (but excluding) 1 July 2026 at a fixed rate of 3.875 per cent. per annum
payable annually in arrear on 1 July in each year and commencing on 1 July 2022 and each 2024 will bear interest on its principal amount from (and including) the
Issue Date to (but excluding) 1 July 2024 at a fixed rate of 3.000 per cent. per annum payable annually in arrear on 1 July in each year and commencing on 1 July 2022,
as further described in the section "Terms and Conditions of the Notes Interest" of this Prospectus. Payments in respect of the Notes will be made without deduction
for or on account of taxes imposed or levied by the Republic of France to the extent described under "Terms and Conditions of the Notes Taxation"
Unless previously redeemed or purchased and cancelled, the 2026 Notes will be redeemed in full at their principal amount on 1 July 2026 (the 2026 Maturity Date)
and the 2024 Notes will be redeemed in full at their principal amount on 1 July 2024 (the 2024 Maturity Date and together with the 2026 Maturity Date, the Maturity
Date). The Notes may, and in certain circumstances shall, be redeemed before the Maturity Date, in whole only but not in part, at their principal amount, together with,
any accrued interest, notably in the event that certain French taxes are imposed (See "Terms and Conditions of the Notes - Redemption and Purchase Redemption for
Taxation Reasons").
The Issuer may, at its option (i) (x) redeem the outstanding 2026 Notes, in whole or in part, from and including the date falling three (3) months before the 2026
Maturity Date to but excluding the 2026 Maturity Date and (y) redeem the outstanding 2024 Notes, in whole or in part, from and including the date falling one (1)
month before the 2024 Maturity Date to but excluding the 2024 Maturity Date, at par plus accrued interest, in accordance with the provisions set out in "Terms and
Conditions of the Notes Redemption and Purchase Pre-Maturity Call Option"; (ii) redeem the outstanding Notes, in whole or in part, at any time, prior to the first
day of the pre-maturity call option period, in accordance with the provisions set out in "Terms and Conditions of the Notes Redemption and Purchase Make-Whole
Redemption by the Issuer" and (iii) redeem all but not some only of the outstanding Notes in the event that seventy-five (75) per cent. or more of the initial aggregate
nominal amount of Notes have been redeemed, in accordance with the provisions set out in "Terms and Conditions of the Notes Redemption and Purchase Clean-
Up Call Option".
Noteholders will be entitled, in the event of a Change of Control (as defined in "Terms and Conditions of the Notes") of the Issuer or in the event that a person, other
than an entity controlled directly or indirectly by the Issuer (within the meaning of Article L.233-3 of the French Code de commerce), came to hold (via purchase,
subscription or any other means) (i) more than 50% of the share capital of Société Air France and/or the economic rights of KLM or (ii) more than 50% of the voting
rights of Société Air France and/or KLM, to request at their sole option the Issuer to redeem all or part of their Notes at their principal amount together with any accrued
interest, subject to certain conditions as more fully described in "Terms and Conditions of the Notes Change of Control".
This document (including the documents incorporated by reference) constitutes a prospectus (the Prospectus) for the purposes of Article 6 of Regulation (EU)
2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to
trading on a regulated market, as amended or superseded (the Prospectus Regulation). This Prospectus has been approved by the French Autorité des marchés
financiers (the AMF) in France in its capacity as competent authority pursuant to the Prospectus Regulation. The AMF only approves this Prospectus as meeting the
standards of completeness, comprehensibility and consistency imposed by the Prospectus Regulation. Such approval should not be considered as an endorsement of
either the Issuer or the quality of the Notes that are the subject of this Prospectus. Investors should make their own assessment as to the suitability of investing in the
Notes.
Application has been made for the Notes to be admitted to trading on the regulated market of Euronext Paris (Euronext Paris) with effect from the Issue Date. Euronext
Paris is a regulated market for the purposes of Directive 2014/65/UE of the European Parliament and of the Council on markets in financial instruments, as amended,
appearing on the list of regulated markets issued by the European Securities and Markets Authority (each a Regulated Market).
The Notes will on the Issue Date be inscribed (inscription en compte) in the books of Euroclear France which shall credit the accounts of the Account Holders (as
defined in "Terms and Conditions of the Notes Form, Denomination and Title" herein) including Euroclear Bank SA/NV (Euroclear) and the depositary bank for
Clearstream Banking S.A. (Clearstream).
The Notes will be issued in dematerialised bearer form (au porteur) in the denomination of 100,000 each. The Notes will at all times be represented in book entry
form (dématérialisé) in the books of the Account Holders (as defined in "Terms and Conditions of the Notes Form, Denomination and Title" herein) in compliance
with Articles L. 211-3 et seq. and R. 211-1 et seq. of the French Code monétaire et financier. No physical document of title (including certificats représentatifs pursuant
to Article R. 211-7 of the French Code monétaire et financier) will be issued in respect of the Notes.
Neither the Notes nor the long-term debt of the Issuer are rated. At the date hereof, the Issuer is not rated.
An investment in the Notes involves certain risks. Prospective investors should have regard to the factors described under the Section "Risk Factors" in this
Prospectus. Unless otherwise stated, references in this Prospectus to the "Group" or to the "Air France-KLM Group" are references to the Issuer and its
consolidated subsidiaries.
Copies of this Prospectus and the documents incorporated by reference in this Prospectus will be published on the websites of the Issuer
(www.airfranceklm.com) and of the AMF (www.amf-france.org), save for the First Quarter 2021 Financial Information and the First Quarter 2021 Results
Press Release which will only be available on the website of the Issuer.
Joint Global Coordinators and Joint Bookrunners
Banco Santander
Deutsche Bank
Société Générale
Corporate & Investment Banking
Joint Bookrunners
Banco Santander
Deutsche Bank
HSBC
Natixis
Société Générale
Crédit Agricole CIB
Corporate & Investment Banking
WS0101.32891369.1

This Prospectus constitutes a prospectus for the purposes of Article 6 of the Prospectus Regulation. This Prospectus
is to be read in conjunction with all the documents which are incorporated herein by reference (see Section
"Documents Incorporated by Reference" below).
This Prospectus does not constitute an offer of, or an invitation by or on behalf of, the Issuer or the Joint Bookrunners
(as defined in "Subscription and Sale" below) to subscribe or purchase any of the Notes. The distribution of this
Prospectus and the offering of the Notes in certain jurisdictions may be restricted by law. Persons into whose
possession this Prospectus comes are required by the Issuer and the Joint Bookrunners to inform themselves about
and to observe any such restrictions.
Potential purchasers and sellers of the Notes should be aware that they may be required to pay taxes or other
documentary charges or duties in accordance with the laws and practices of the country where the Notes are
transferred or other jurisdictions (including as a result of change in law). Potential investors are advised to ask for
their own tax adviser's advice on their individual taxation with respect to the acquisition, holding, sale and
redemption of the Notes. Only these advisers are in a position to duly consider the specific situation of the potential
investor.
Neither the Notes nor the long-term debt of the Issuer are rated. At the date hereof, the Issuer is not rated. One or
more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reflect the
potential impact of all risks related to structure, market, additional factors discussed below, and other factors that
may affect the value of the Notes. A rating or the absence of a rating is not a recommendation to buy, sell or hold
securities.
Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances.
In particular, each potential investor should:
(i)
have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and
risks of investing in the Notes and the information contained or incorporated by reference in this
Prospectus or any applicable supplement;
(ii)
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular
financial situation, an investment in the Notes and the impact such investment will have on its overall
investment portfolio;
(iii)
have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes,
including where the currency for principal or interest payments is different from the potential investor's
currency;
(iv)
understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant indices
and financial markets; and
(v)
be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic,
interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
The investment activities of certain investors are subject to legal investment laws and regulations, or review or
regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and
to what extent (1) the Notes are legal investments for it, (2) the Notes can be used as collateral for various types of
borrowing and (3) other restrictions apply to its purchase, sale or pledge of any Notes. Financial institutions should
consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Notes under
any applicable risk-based capital or similar rules.
For a description of further restrictions on offers and sales of Notes and the distribution of this Prospectus, see
Section "Subscription and Sale" below.
WS0101.32891369.1

No person is or has been authorised to give any information or to make any representations other than those
contained in this Prospectus and, if given or made, such information or representations must not be relied upon as
having been authorised by, or on behalf of, the Issuer or the Joint Bookrunners.
Neither the delivery of this Prospectus nor any sale made in connection herewith shall, under any circumstances,
create any implication that there has been no change in the affairs of the Issuer or the Group, since the date hereof
or the date upon which this Prospectus has been most recently amended or supplemented or that there has been no
adverse change in the financial position of the Issuer since the date hereof or the date upon which this Prospectus
has been most recently amended or supplemented or that the information contained in it or any other information
supplied in connection with the Notes is correct as of any time subsequent to the date on which it is supplied or, if
different, the date indicated in the document containing the same.
The Joint Bookrunners have not separately verified the information or representation contained or incorporated by
reference herein. To the fullest extent permitted by law, the Joint Bookrunners accept no responsibility whatsoever
for the information or representation contained or incorporated by reference in this Prospectus or any other
information provided by the Issuer or in connection with the Notes or their distribution or for any other statement,
made or purported to be made by the Joint Bookrunners or on their behalf in connection with the Issuer or the
offering and issue of the Notes. The Joint Bookrunners accordingly disclaim all and any liability whether arising in
tort or contract or otherwise (save as referred to above) which they might otherwise have in respect of this Prospectus
or any such information or statement.
Neither this Prospectus nor any other information supplied in connection with the Notes or their distribution is
intended to provide the basis of any credit or other evaluation or should be considered as a recommendation by the
Issuer or the Joint Bookrunners that any recipient of this Prospectus or any other information supplied in connection
with the Notes or their distribution should purchase any of the Notes. None of the Joint Bookrunners acts as a
fiduciary to any investor or potential investor in the Notes. Each investor contemplating subscribing or purchasing
Notes should make its own independent investigation of the financial condition and affairs, its own appraisal of the
creditworthiness, of the Issuer or the Group and of the terms of the offering, including the merits and risks involved.
For further details, see Section "Risk Factors" herein. The contents of this Prospectus are not to be construed as
legal, business or tax advice. Each prospective investor should subscribe for or consult its own advisers as to legal,
tax, financial, credit and related aspects of an investment in the Notes. None of the Joint Bookrunners undertakes to
review the financial condition or affairs of the Issuer or the Group after the date of this Prospectus nor to advise any
investor or potential investor in the Notes of any information coming to the attention of any of the Joint Bookrunners.
EU MIFID II PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPS ONLY TARGET
MARKET - Solely for the purposes of each manufacturer's product approval process, the target market assessment
in respect of the Notes, taking into account the five categories referred to in item 18 of the Guidelines published by
the European Securities and Markets Authority (ESMA) on 5 February 2018, has led to the conclusion that: (i) the
target market for the Notes is eligible counterparties and professional clients only, each as defined in Directive
2014/65/EU (as amended, MiFID II); and (ii) all channels for distribution of the Notes to eligible counterparties
and professional clients are appropriate. Any person subsequently offering, selling or recommending the Notes (a
distributor) should take into consideration the manufacturers' target market assessment; however, a distributor
subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either
adopting or refining the manufacturers' target market assessment) and determining appropriate distribution
channels.
UK MIFIR PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPS ONLY TARGET
MARKET Solely for the purposes of each manufacturer's product approval process, the target market assessment,
taking into account the five categories referred to in item 18 of the Guidelines published by ESMA on 5 February
2018 (in accordance with the FCA's policy statement entitled "Brexit our approach to EU non-legislative materials"),
in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is only eligible counterparties,
as defined in the FCA Handbook Conduct of Business Sourcebook (COBS), and professional clients, as defined in
Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act
WS0101.32891369.1

2018 (UK MiFIR); and (ii) all channels for distribution of the Notes to eligible counterparties and professional
clients are appropriate. Any person subsequently offering, selling or recommending the Notes (a distributor) should
take into consideration the manufacturers' target market assessment; however, a distributor subject to the FCA
Handbook Product Intervention and Product Governance Sourcebook (the UK MiFIR Product Governance Rules)
is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining
the manufacturers' target market assessment) and determining appropriate distribution channels.

IMPORTANT - PRIIPS REGULATION / PROHIBITION OF SALES TO EEA RETAIL INVESTORS - The
Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the European Economic Area (EEA). For these purposes, a retail investor
means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii)
a customer within the meaning of Directive 2016/97/EU, where that customer would not qualify as a professional
client as defined in point (10) of Article 4(1) of MiFID II. Consequently, no key information document required by
Regulation (EU) No 1286/2014 (as amended, the PRIIPs Regulation) for offering or selling the Notes or otherwise
making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes
or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
IMPORTANT - PRIIPS REGULATION / PROHIBITION OF SALES TO UK RETAIL INVESTORS The Notes
are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made
available to any retail investor in the United Kingdom (UK). For these purposes, a retail investor means a person
who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it
forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (EUWA); or (ii) a customer
within the meaning of the provisions of the Financial Services and Markets Act (FSMA) and any rules or regulations
made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional
client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by
virtue of the EUWA. Consequently, no key information document required by Regulation (EU) No 1286/2014 as it
forms part of UK domestic law by virtue of the EUWA (the UK PRIIPs Regulation) for offering or selling the Notes
or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling
the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs
Regulation.

WS0101.32891369.1

TABLE OF CONTENTS
RISK FACTORS ....................................................................................................................................................... 1
DOCUMENTS INCORPORATED BY REFERENCE .......................................................................................... 9
TERMS AND CONDITIONS OF THE 2026 NOTES .......................................................................................... 14
TERMS AND CONDITIONS OF THE 2024 NOTES .......................................................................................... 26
USE OF PROCEEDS .............................................................................................................................................. 38
RECENT DEVELOPMENTS ................................................................................................................................ 39
SUBSCRIPTION AND SALE ................................................................................................................................ 52
GENERAL INFORMATION ................................................................................................................................. 55
PERSONS RESPONSIBLE FOR THE INFORMATION GIVEN IN THE PROSPECTUS ........................... 59

(i)
WS0101.32891369.1

RISK FACTORS
The Issuer considers that the risk factors described below are important to make an investment decision in the Notes and/or
may alter its ability to fulfil its obligations under the Notes towards investors. The risk factors may relate to the Issuer and
the Group.
The following describes the main risk factors that the Issuer considers, as of the date hereof, material with respect to the
Notes. The risks described below are not the only risks the Issuer and its subsidiaries face and they do not describe all of
the risks of an investment in the Notes. The inability of the Issuer to pay interest, principal or other amounts on or in
connection with any Notes may occur for other reasons and the Issuer does not represent that the statements below
regarding the risks of holding any Notes are exhaustive. Additional risks and uncertainties not currently known to the
Issuer or that it currently believes to be immaterial could also have a material impact on its business operations or on an
investment in the Notes.
Prior to making an investment decision in the Notes, prospective investors should consider carefully all the information
contained or incorporated by reference in this Prospectus, including the risk factors detailed below. In particular,
prospective investors, subscribers and holders of Notes must make their own analysis and assessment of all the risks
associated to the Notes and the risks related to the Issuer, its activities and financial position. They should also consult
their own financial or legal advisors as to the risks entailed by an investment in the Notes and the suitability of such an
investment in light of their particular circumstances.
The Notes should only be purchased by investors who are financial institutions or other professional investors or qualified
investors who are able to assess the specific risks implied by an investment in the Notes, or who act on the advice of
financial institutions.
In each sub-category below the Issuer sets out first the most material risk, in its assessment, taking into account the expected
magnitude of its negative impact and the probability of its occurrence. This section includes the main risks which, as of the
date of the Prospectus, could potentially impact the Group's activity, financial situation, reputation, results and outlook,
as notably identified within the framework of the establishment of the Group's risk mapping, which evaluates their
criticality, i.e. their gravity and probability of occurrence, as well as the mitigation plans in place.
Words and expressions defined under sections "Terms and Conditions of the 2026 Notes" and "Terms and Conditions of
the 2024 Notes" shall have the same meanings in this section. References to "Conditions" in this section refer to the Terms
and Conditions of the 2026 Notes and the Terms and Conditions of the 2024 Notes (together, the Terms and Conditions
of the Notes).
1.
RISKS FACTORS RELATING TO THE ISSUER AND THE GROUP
The risk factors relating to the Issuer and its activities are set out on pages 132 to 150 of the 2020 Universal Registration
Document which are incorporated by reference herein (as defined in Section "Documents Incorporated by Reference" of
this Prospectus). The risk factors considered to be the most significant (indicated by an asterisk) are presented first. These
risks include:
Geopolitical and macro-economic risks;
- Impact of the Covid-19 epidemic on the Group's activities*;
- Terrorist attacks, threats of attack or geopolitical instability*;
- Competition in the short, medium and long-haul air passenger transportation market*;
- Cyclical nature of the air transportation industry*;
- Trend in the oil price*; and
- Competition and trends in the aeronautics maintenance market.
1
WS0101.32891369.1

Risks relating to the air transportation activity;
- Risks related to airline safety*;
- Risks related to the environment;
Acceptability of air transportation growth*;
Climate change;
Carbon credit risk;
- Loss of flight slots or lack of access to flight slots;
- Reinforcement of passenger compensation rights;
- Changes in international, national or regional regulations and legislation;
- Regulatory authorities' inquiry into the commercial cooperation agreements between carriers; and
- Commitments vis-à-vis the European Commission.
Risks related to the Group's processes;
- Failure of a critical IT system, IT risks and cyber criminality;
Cybercriminality*;
Data security;
Business continuity and regulatory compliance;
- Non-compliance with regulations, including competition and anti-bribery laws;
- Operational performance and customer risks;
- Working conditions and human capital development; and
- Pension plans.
Legal Risks;
Financial market risks;
- Liquidity risks*;
- Financing risks*;
- Risks relating to the fuel price;
- Currency risks;
- Investment exposure ("translation risk")
- Exposure on indebtedness;
- Counterparty risk exposure;
- Interest rate risk; and
- Investment risks.
2.
RISKS FACTORS RELATING TO THE NOTES
The following paragraphs describe the main risk factors that are considered material for prospective investors in order to
assess the market risk associated with the Notes. They do not describe all the risks of an investment in the Notes and should
2
WS0101.32891369.1

be read and interpreted in the context of the sanitary crisis resulting from the coronavirus (COVID-19) and its potential
impact on the Issuer and its Group (described in particular in section 3.1.1.1. "Impact of the Covid-19 epidemic on the
Group's activities" of the 2020 Universal Registration Document).
2.1
Risks for the Noteholders as creditors of the Issuer
2.1.1
Credit Risk
As contemplated in Condition 2 (Status of the Notes) of the Terms and Conditions of the Notes, the obligations of the Issuer
in respect of the Notes and any interest payable under the Notes constitute direct, general, unconditional, unsubordinated
and unsecured obligations of the Issuer. However, Noteholders are exposed to the credit risk of the Issuer. Credit risk refers
to the risk that the Issuer may be unable to meet its financial obligations under the Notes. If the creditworthiness of the
Issuer deteriorates, and notwithstanding Condition 9 (Events of Default) of the Terms and Conditions of the Notes which
enables the investors to request the redemption of the Notes, it may not be able to fulfil all or part of its payment obligations
under the Notes. In such a case, the value of the Notes may decrease, which could materially negatively impact the
Noteholders and investors may lose all or part of their investment.
2.1.2
French insolvency law
As a société anonyme incorporated in France, French insolvency laws apply to the Issuer. The Noteholders will be grouped
automatically for the defence of their common interests in a Masse, as defined in Condition 11 (Representation of the
Noteholders). However, under French insolvency law, holders of debt securities (such as the Notes) issued by a French
company (as the Issuer) are automatically grouped into a single assembly of holders (the Assembly) in order to defend
their common interests if a preservation procedure (procédure de sauvegarde, procédure de sauvegarde accélérée or
procédure de sauvegarde financière accélérée), a judicial reorganisation procedure (procédure de redressement
judidicaire) or a judicial liquidation (liquidation judiciaire) is opened in France with respect to the Issuer.
The Assembly comprises holders of all debt securities issued by the Issuer regardless of their governing law and will not
be convened in accordance with Condition 11 (Representation of the Noteholders).
The Assembly deliberates on the proposed preservation plan (projet de plan de sauvegarde), the proposed accelerated
preservation plan (projet de plan de sauvegarde accélérée), accelerated financial preservation plan (projet de plan de
sauvegarde financière accélérée) or judicial reorganisation plan (projet de plan de redressement) applicable to the Issuer
and may notably agree to:
- increase the liabilities (charges) of holders of debt securities (including the Noteholders) by rescheduling due
payments and/or partially or totally writing off receivables in form of debt securities;
- establish an unequal treatment between holders of debt securities (including the Noteholders) if the differences in
situation so justify; and/or
- decide to convert debt securities into securities that give or may give right to share capital.
Decisions of the Assembly will be taken by a two-third majority (calculated as a proportion of the amount of debt securities
held by the holders who voted during such Assembly; notwithstanding any clause to the contrary and the law governing
the issuance agreement). No quorum is required for the Assembly to be validly held.
For the avoidance of doubt, the meeting provisions set out in Condition 11 (Representation of the Noteholders) will not be
applicable to the extent they are not in compliance with compulsory insolvency law provisions that apply in these
circumstances. The procedures, as described above or as they may be amended, could have an adverse impact on holders
of the Notes seeking repayment in the event that the Issuer or its subsidiaries were to be subject to French insolvency
proceedings.
3
WS0101.32891369.1

The insolvency procedure in France is regulated by the provisions of the French Code de commerce as amended by
ordinance no. 2014-326 dated 12 March 2014 and these provisions govern the common rights, interests and representation
of the Noteholders in this context. As a result, Noteholders should be aware that they will generally have limited ability to
influence the outcome of an accelerated preservation (procédure de sauvegarde accélérée), an accelerated financial
preservation (procédure de sauvegarde financière accélérée), a preservation (procédure de sauvegarde) or a judicial
reorganisation procedure (procédure de redressement judiciaire) of the Issuer in France, especially given the current capital
structure of the Issuer.
It should be noted that a new European directive entitled "Directive (EU) 2019/1023 on preventive restructuring
frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures
concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132" has been adopted by
the European Union on 20 June 2019 (the Restructuring Directive) and shall be transposed by the Member States before
17 July 2021. Depending on how it will be transposed into French law, it may modify French insolvency law described
above and impact the situation of Noteholders in the event that the Issuer or its Subsidiaries were to be subject to the
relevant French insolvency proceedings.
More specifically the Restructuring Directive is expected to impact the process of adoption of restructuring plans under
insolvency proceedings. Creditors (including the Noteholders) shall be treated in separate classes which reflect certain class
formation criteria for the purpose of adopting a restructuring plan. Classes shall be formed in such a way that each class
comprises claims or interests with rights that are sufficiently similar to justify considering the members of the class a
homogenous group with commonality of interest. As a minimum, secured and unsecured claims shall be treated in separate
classes for the purpose of adopting a restructuring plan. A restructuring plan shall be deemed to be adopted by affected
parties, provided that a majority in the amount of their claims or interests is obtained in each and every class (the required
majorities shall be laid down by Member States at not higher than 75% in the amount of claims or interests in each class).
If the restructuring plan is not approved by each and every class of affected parties, the plan may however be confirmed
by a judicial or administrative authority by applying a cross-class cram-down.
Therefore, when such directive is transposed into French law, it cannot be excluded that the Noteholders will no longer
deliberate on the proposed restructuring plan in a separate assembly, meaning that they will no longer benefit from a
specific veto power on this plan. Instead, as any other affected parties, the Noteholders will be grouped into one or several
classes (with potentially other types of creditors) and their dissenting vote may possibly be overridden by a cross-class
cram down. The commencement of insolvency proceedings against the Issuer would have a material adverse effect on the
market value of Notes issued by the Issuer. Any decisions taken by the Assembly or a class of creditor, as the case may be,
could substantially impact the Noteholders and even cause them to lose all or part of their investment, should they not be
able to recover amounts due to them from the Issuer.
2.1.3
Structural subordination due to holding company status
The Issuer is a holding company with no material assets other than its shareholdings in its subsidiaries Société Air France
(SAF) and Koninklijke Luchtvaart Maatschappij N.V. (KLM). Investors will not have any direct claims on the cash flows
or the assets of the Issuer's subsidiaries and such subsidiaries have no obligation, contingent or otherwise, to pay amounts
due under the Notes or to make funds available to the Issuer for these payments. Therefore, in the event the Issuer fails to
comply with its obligations under the Notes, the investors will not be able to recover all or part of their investment from
the Issuer's subsidiaries.
Claims of the creditors of the Issuer's subsidiaries have priority as to the assets of such subsidiaries over the claims of the
Noteholders. Consequently, Noteholders are in effect structurally subordinated on insolvency to the prior claims of the
creditors of the Issuer's subsidiaries. Hence, the investors may not be able to recover all or part of their investment once
the claims of the creditors of the Issuer's subsidiaries have been served.
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2.2
Risks relating to the trading markets of the Notes
2.2.1
Market value of the Notes
The market value of the Notes will be affected by the creditworthiness of the Issuer and a number of additional factors,
including, but not limited to the market interest and yield rates and the time remaining to the maturity date.
The value of the Notes depends on a number of interrelated factors, including economic, financial and political events in
France or elsewhere, including factors affecting capital markets generally and Euronext Paris on which such Notes are
traded. The price at which a holder of such Notes will be able to sell such Notes prior to maturity may be at a discount,
which could be substantial, from the issue price or the purchase price paid by such purchaser, which could materially
negatively impact the Noteholders. Accordingly, all or part of the capital invested by the Noteholder may be lost upon any
transfer of the Notes, so that the Noteholder in such case would receive significantly less than the total amount of capital
invested.
2.2.2
The secondary market for the Notes
Application has been made to Euronext Paris for the Notes to be admitted to trading on Euronext Paris as from the Issue
Date. An established trading market in the Notes may never develop or if a secondary market does develop, it may be
illiquid. Although the Notes are expected to be admitted to trading on Euronext Paris as from the Issue Date, the Notes
may be not so admitted or that an active market will develop. The absence of liquidity may have a significant material
adverse effect on the value of the Notes.
The development or continued liquidity of any secondary market for the Notes will be affected by a number of factors such
as general economic conditions, the financial condition, the creditworthiness of the Issuer and/or the Group, the outstanding
amount of the Notes, any redemption features of the Notes as specified in Condition 5 of the Terms and Conditions of the
Notes and the level, direction and volatility of interest rates generally. Such factors also will affect substantially the market
value of the Notes.
The yield of the 2026 Notes as at the Issue Date is 4.000 per cent. per annum and the yield of the 2024 Notes as at the Issue
Date is 3.125 per cent. per annum. However, investors may not be able to sell their Notes in the secondary market (in which
case the market or trading price and liquidity may be adversely affected) or may not be able to sell their Notes at prices
that will provide them with a yield comparable to similar investments that have a developed secondary market. Hence, the
investors may receive a lower yield than anticipated at the time of the issue.
2.2.3
Interest rate risks
The 2026 Notes bear interest on their outstanding principal amount from time to time at the rate of 3.875 per cent. per
annum, payable annually in arrears on 1 July in each year and commencing on 1 July 2022 and the 2024 Notes bear interest
on their outstanding principal amount from time to time at the rate of 3.000 per cent. per annum, payable annually in arrears
on 1 July in each year and commencing on 1 July 2022, in accordance with Condition 4 (Interest). Investment in the Notes
involves the risk that subsequent changes in market interest rates may adversely affect the value and the yield of the Notes
and Noteholders may receive lower return on the Notes than anticipated at the time of the issue.
While the nominal interest rate of a fixed interest rate note is fixed during the life of such a note or during a certain period
of time, the current interest rate on the capital market (market interest rate) typically changes on a daily basis. As the market
interest rate changes, the price of such note changes in the opposite direction. If the market interest rate increases, the price
of such note typically falls, until the yield of such note is approximately equal to the market interest rate. If the market
interest rate decreases, the price of a fixed rate note typically increases, until the yield of such note is approximately equal
to the market interest rate. Noteholders should be aware that movements of the market interest rate can adversely affect the
price of the Notes and can lead to losses for the Noteholders if they sell Notes during the period in which the market interest
rate exceeds the fixed rate of the Notes.
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