PARIS, February 23: French flag carrier Air France is set for a partial flotation later this year, now that the company has returned to profit and needs to finance an important fleet renewal programme.Les Echos newspaper said the state will announce it will float 15 to 20 per cent in Cie Nationale Air France SA in the autumn.
The state has a 95-per cent stake at the moment and its holding could fall to 55 per cent as a consequence of the flotation and allocation of shares to pilots and management in exchange for a wage cut.
The paper said the government, anxious to not let its holding dip below 51 per cent, envisaged a "safety cushion" of some four to five per cent earmarked for an eventual foreign ally, if such a candidate materialised in future.
Les Echos said Air France could unveil a profit of 1.5 to 2.0 billion francs ($327 million) for the financial year in March. It added the airline planned to spend 30 billion francs on new planes.
There was no immediate reaction from thegovernment on the newspaper report.
A transport ministry source said earlier this month the French government planned to respond in February to proposals by the carrier on a partial privatisation.
At the end of January, the government appointed Credit Agricole Indosuez and Morgan Stanley as its bank advisers in the flotation.
The source said the market flotation of a minority stake could come in "April or May at the earliest, that is, it would be technically possible from then".
However, the company still needed agreement with its pilots over a planned offer of shares in exchange for pay cuts and must take account of market conditions, the source added.
"The idea of strengthening Air France by an injection of fresh capital, in a way which would not be a recapitalisation, is envisaged," the source added.
The actual details of this transaction "have not yet been agreed", the source said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
