PARIS: Air France-KLM shares fell more than 10 percent on Wednesday after the European airline group announced the sale of bonds convertible into new shares worth 300 million euros to pay back state aid and boost capital.

Air France-KLM made huge losses in 2020 and 2021 after the coronavirus pandemic slashed passenger numbers to around a third of normal levels, but has made a profit so far this year.

The French and Dutch governments provided 10 billion euros in loans to Air France-KLM to help the airline as planes were grounded during the outbreak.

Stocks fell by around 11.5 percent after 1100 GMT after the debt issue.

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The airline also faces the threat of strikes in France during the busy Christmas period after two unions representing employees issued a warning of industrial action between December 22 and January 2.

Negotiations continue for a collective agreement for cabin crew.

The company said the money raised from the debt issue would be “fully” allocated to paying back the French state.

“This transaction marks a further step in the Group’s initiatives to accelerate the repayment of the French State aid, continue to support the strengthening of equity capital, and help optimise financial costs,” the company said in a statement.

The French and Dutch governments, whose stakes are 28.6 percent and 9.3 percent respectively, said they would not participate in the rights issue.

French shipping giant CMA CGM “expressed the intention to participate” in the placement pro-rata to its current shareholding of 9.0 percent“, the airline group said.