PARIS (Reuters) - Air France-KLM may raise more capital to bolster its balance sheet as travel begins to recover from the COVID-19 pandemic in the coming months, its CEO said on Monday. Ben Smith, speaking at an online industry event as a 1.036 billion euros ($1.25 billion) share issue by the airline group nears completion, signalled it could move relatively quickly to seek further funds and reduce debt. “We do have heavy debt that is holding back our balance sheet, so this may have to get looked at again later in the year,” he said, adding Air France-KLM was encouraged by European progress on vaccinations and digital health passes. The capital hike sees the French government more than double its stake in the airline group to almost 30% as part of a total recapitalisation package worth about 4 billion euros announced earlier this month. The stock issue at 4.84 euros per share will raise 1.036 billion euros with the full exercise of an option to increase the offering, the airliner said, after its shares closed at 5.03 euros in Paris. It follows last year’s 10.4 billion-euro debt bailout for the group, backed by the French and Dutch governments. “This is positive for them in terms of getting through these difficult times but negative in that it’s giving them enormous debts for the future and potential political interference,” aviation consultant John Strickland said at the same event. As part of the latest package, France is transforming 3 billion euros of government loans into hybrid bond instruments, while the Netherlands is seeking European Union approval for the similar conversion of another 1 billion. The new share issue will dilute the Dutch government’s equity stake to 9.3%. China Eastern Airlines will increase its stake in the group from 8.8% to 9.6%. As expected, Delta Air Lines will see its holding diluted to 5.8%. Air France-KLM currently plans at least to match the 50% of pre-crisis summer flight capacity it managed last year and is optimistic about a sharper rebound, Smith said. “We’re loading capacity on an opportunistic basis,” the CEO added. “We do have enough crew trained and qualified to fly much more.” ($1 = 0.8314 euros)