LONDON - Air France-KLM received over 2.2 billion euros ($2.63 billion)of demand for a bond sale expected to raise 600 million euros on Thursday, according to a lead manager.

The airline company set initial pricing around 3.75% for a new three-year bond and around 4.5% for a five-year bond earlier on Thursday, according to a message to investors seen by Reuters.

It expects to raise 300 million euros from each of the two tranches and pricing is expected later on Thursday, the message said.

At this level, the company is offering a new issue premium to incentivise investors; its outstanding January 2025 bonds are trading at a yield of 2.95%, Eikon data showed.

Several airline operators including Easyjet, British Airways owner IAG and Ryanair have issued bonds this year after vaccination programmes across Europe raised hopes for a rebound in the travel sector.

But Air France-KLM sales are showing little sign so far of the travel recovery it still hopes to see by summer, the airline group said earlier this month, as it posted a wider first-quarter operating loss.

The company hired Deutsche Bank, Santander and Societe Generale for the deal on Monday.

($1 = 0.8371 euros)

(Reporting by Abhinav Ramnarayan; editing by Yoruk Bahceli and Rachel Armstrong) ((Abhinav.Ramnarayan@thomsonreuters.com; 0044 751 745 1044; Reuters Messaging: Twitter: @abhinavvr))