PARIS, Could 18 (Reuters) – French transport agency CMA CGM will take a stake in Air France-KLM (AIRF.PA) as a part of an air cargo partnership, betting on rising demand for flying items world wide as provide chains stay snarled within the wake of the pandemic.

CMA CGM will take as much as 9% of Air France-KLM, price about 240 million euros ($252 million) based mostly on Tuesday’s closing worth, a part of a attainable capital improve by the airline group all through their partnership that’s initially set to run for 10 years, the 2 firms mentioned.

It can make CMA CGM the fourth largest shareholder, in keeping with Refinitiv knowledge, and mirrors the same initiative deliberate by transport firm MSC, which has teamed up with Germany’s Lufthansa (LHAG.DE) on a possible bid for Italian airline ITA Airways. learn extra

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Air France-KLM shares rose 3.5% in early commerce, making it a prime performer on the Paris SBF-120 fairness index (.SBF120).

Marseille-based CMA CGM, one of many world’s largest container transport traces, established an air cargo division final 12 months as a part of a push to develop non-maritime logistics.

Surging earnings for ocean transport, linked to excessive freight charges because the COVID-19 pandemic, have allowed CMA CGM and different shippers to put money into different types of transport so as to add resilience to international provide chains and shield towards a downturn.

“All ocean container carriers are minting cash these years and search to place all of them neatly into pushing their companies choices wider, to incorporate extra modal, like air, and to get into full transport,” mentioned Peter Sand, chief analyst on the air and ocean freight fee benchmarking platform Xeneta.

He added that prospects would profit from shorter transit instances for items.

CMA CGM, privately managed by the Saade household, acquired auto transport firm Gefco final month that had been co-owned by Russian Railways (RZD) and carmaker Stellantis (STLA.MI). learn extra

Air France-KLM and CMA CGM mentioned their partnership was anticipated to generate “vital income synergies” and mentioned that they had a “robust ambition to take a position and develop sustainably” within the air freight market. They can even pool their international gross sales sources.

As a shareholder, the Dutch state “helps the partnership which is sweet for the monetary place,” a Finance Ministry spokesperson mentioned.

ING analysts welcomed the deal, which can assist the French provider capitalise on part of the enterprise that was not very worthwhile earlier than the pandemic. Combining forces with CMA offers it “materials” market share, they mentioned in a notice.

The partnership with Air France-KLM covers a mixed fleet of 10 full-freighter plane together with 4 at CMA CGM Air Cargo and 6 at Air France-KLM. Collectively, additionally they have 12 plane on order.

It additionally covers Air France-KLM’s stomach plane capability, masking freight carried within the airline group’s greater than 160 long-haul passenger plane.

Air France-KLM competes within the cargo market with European carriers together with Lufthansa and freight specialist Cargolux, in addition to main Gulf and Asian carriers.

The separate networks of Air France, KLM and Martinair – a subsidiary of the group – rank the group round eighth within the international league desk of cargo airways by site visitors, in keeping with Worldwide Air Transport Affiliation statistics.

Air France-KLM’s primary shareholders, which embody the French and Dutch governments, supported CMA CGM gaining a board seat on the firm’s subsequent board assembly on Could 24, the companions mentioned.

The tie-up is topic to anti-trust approval. The ultimate measurement of CMA’s stake can be decided by the airline’s deliberate capital improve price as much as 4 billion euro. learn extra

Some 2 billion tonnes tonnes of world cargo are moved yearly in containers by sea, whereas air freight volumes are round 60-70 million tonnes, Xeneta’s Sand mentioned.

“Cargo does shift on occasion, from ocean to air, when situations are proper.”

In a latest instance of how COVID lockdowns are spurring firms to make use of air for speedier deliveries, Normal Electrical’s (GE.N) healthcare unit flew dye used for medical scans and checks to assist fight U.S. shortages attributable to the suspension of its Shanghai manufacturing unit. learn extra

Nestle (NESN.S) can also be flying child system provides from Europe to restock U.S. grocery store cabinets resulting from a scarcity there. learn extra

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Reporting by Tim Hepher and Gus Trompiz; Further reporting by Anthony Deutsch in Amsterdam and Jonathan Saul in London; Modifying by Josephine Mason, Jason Neely and Kim Coghill

Our Requirements: The Thomson Reuters Belief Rules.