France To Float 20% Of Air France

France will float 20 per cent of flag carrier Air France before the end of June, the finance and transport ministers said yesterday.

Of this stake, 15 per cent will be for the company staff, or three per cent of the total capital.

Another 10 per cent of the share capital will be allocated to pilots, among the highest-paid employees of the group, in exchange for a 15 per cent wage cut.

Finance minister Dominique Strauss-Kahn and transport minister Jean-Claude Gayssot said that another FFr1.5 billion, or 10 per cent, would be issued in warrants to shareholders which they could exercise at a later time.

 

The operation values Air France at FFr15 billion ($2.5 billion).

Gayssot said Air France planned to invest at least FFr40 billion and maybe more within the next five years on fleet renewal and expansion.

He said the company would increase its fleet of long-haul planes to 97 from 70 and its medium-haul fleet to 139 planes from 125.

The French state has currently a stake of 95 per cent and its holding could fall to 55 per cent as a consequence of the operation.

The Les Echos newspaper said on Monday that Air France could unveil a profit of FFr1.5-2.0 billion for the financial year in March.

At the end of January, the government appointed Credit Agricole Indosuez and Morgan Stanley as its bank advisers in the flotation.

The La Tribune newspaper said on Monday the government had decided to go ahead with the sale because there is no more time to lose with finalising the new legal status of the group.

It said European rivals such as Alitalia and Iberia have begun privatising and entering into international alliances.

Even though the state refuses to go below 50 percent, this partial privatisation can only be a prelude to a full privatisation in the medium or long-term, the newspaper added.