SAF key part of Air France-KLM’s €1bn sustainability-linked bonds

Air-France-KLM has successfully issued two €500m sustainability-linked bonds. The interest rate on the bonds is linked to the airline cutting its well-to-wake scope 1 and 3 jet fuel greenhouse gas (GHG) emissions by 10% per revenue tonne kilometre (RTK) by 2025 compared to 2019.

Investor demand was 2.6 times the issue. 

Air France-KLM’s issued it Sustainability-Linked Financing Framework, aligned with the Sustainability-Linked Bond Principles, in June 2020.

The airline group says it will cut greenhouse gas emissions in 2030 per RTK by 30% compared to 2019.

“SAF plays a central role in decarbonization,” said Fatima da Gloria de Sousa, VP Sustainability Air France-KLM, in a presentation to investors.

The airline group is committed to using 10% certified SAF by 2030. In October 2022 it signed two contracts with Neste and DG Fuels for a total volume of 1.6 million tons of SAF between 2023 and 2036. In December 2022 it a MOU with Total Energies for delivery of more than 800k tons of SAF over a 10-year period starting in 2023.

Air France-KLM expects SAF to contribute 45% of its carbon saving between 2019 and 2050. It is also relying on new efficient aircraft (21%), operational efficiencies – including air traffic control (10%), new technology including electricity and hydrogen (16%) and off-setting (8%).

Natixis was sole sustainability structuring advisor and Deutsche Bank, HSBC, Natixis, Société Générale and Crédit Agricole CIB joint bookrunners.

Standard & Poor’s gives Air France-KLM a solicited ESG rating of 64/100. Moody’s has said it is making a “Significant contribution to Sustainability.”