The Dutch government is to put a further €220 million into Air France-KLM by participating in a new share issue, finance minister Sigrid Kaag has told MPs.

The airline is planning to raise almost €2.2 billion via the rights issue and both the Dutch and French states have said they intend to participate in order to maintain the size of their interests.

The money will be used to pay back some of the French government loan and to shore up the company’s own financial position, following the coronavirus pandemic and subsequent travel restrictions.

Air France-KLM is planning to issue over 1.928 billion new shares at a price of  €1.17, a sharp discount on Monday’s close of €4.35.

This means the Dutch cabinet will need to spend some €220 million to keep its 9.3% stake in the company in place. Finance minister Sigrid Kaag said in a note to MPs that participating in the new issue is in the interests of the KLM-Schiphol combination and the Netherlands.

She said expected the the European Commission would not regard the participation as state support.

The deal will only go ahead from the Dutch side with the approval of parliament.