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Monday, 29 July, 2002, 16:42 GMT 17:42 UK
France to cut stake in national airline
Air France Concorde jet
The French government is planning to give up its majority stake in the country's national airline Air France.

The French economy and finance ministry said in a statement that the government would "reduce its capital interest while remaining one of the company's main shareholders."

The government is currently the airline's biggest shareholder, holding 54.4% of its stock.

A spokesman for the economy ministry told the Reuters news agency that the government aims to cut its stake in the carrier to "just below 20%."

The ministry said the reduction of the government's stake in the airline is designed to help it compete more effectively.

"In order to allow the company to accelerate the modernisation of its fleet, to consolidate its alliances and strike partnerships, the state must give it more freedom," it said.

But there is as yet no firm timetable for the sell-off.

The economy ministry said only that the sale would go ahead "when market conditions permit."

Selling pressure

The move underlines the new centre-right French government's determination to press ahead with plans to dilute the state's industrial holdings.

Previous French governments have been reluctant to surrender control over state-owned industries.

Air France took its first step towards private ownership in 1994, when the carrier's financies were crumbling under the burden of heavy debts.

The European Union competition authorities waived through a controversial bail-out package only on condition that the government agree to privatise the airline.

The first tranche of Air France shares were sold in February 1999, attracting strong investor interest.

Air France, based at Paris' Roissy-Charles de Gaulle airport, is now regarded as one of Europe's top airlines, underpinned by a strong transatlantic alliance with US carrier Delta Air Lines.

The company has come through the travel industry downturn triggered by the 11 September attacks better than some of its European counterparts.

See also:

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