Government to cut share in Air France-KLM

9th December 2004, Comments 0 comments

PARIS, Dec 9 (AFP) - The French government said Thursday it planned to cut its stake in Air France-KLM to 18.35 percent from 44.1 in a share sale expected to raise nearly EUR 720 million (USD 958 million) that would be used to reduce state debt.

PARIS, Dec 9 (AFP) - The French government said Thursday it planned to cut its stake in Air France-KLM to 18.35 percent from 44.1 in a share sale expected to raise nearly EUR 720 million (USD 958 million) that would be used to reduce state debt.

"The EUR 700 million will applied to reducing the state's debt and not to financing new expenditures," French Finance Minister Herve Gaymard told a news conference.

The state has not held a majority interest in the airline since May when Air France acquired Dutch rival KLM.

In addition to the sale to investors of 18.4 percent of the airline's capital, the government will offer seven to eight percent to employees under preferential conditions.

Two banks, Dutch bank ABN Amro and Societe Generale of France, will handle the sale. Investors will be invited to bid on the shares and the banks will place them on the market based on best offers.

The offer made to investors comprises 49.5 million shares, which would be worth EUR .7 million on the basis of the Wednesday closing price of Air France-KLM, according to a bank document sent to investors and obtained by AFP.

The offer aimed at employees will be in two parts, with 13.2 million shares reserved for workers who agree to salary reductions. The remaining 8.4 million will be sold to employees under preferential conditions, according to the document.

When the deal is completed, employees will own a total of 17.4 percent of the capital.

Air France-KLM shares fell 2.41 percent at 14.19 euros on Thursday, while the CAC 40 index was down 0.73 percent overall.

"The transaction was expected and will change nothing in the economic situation of the group as such since privatisation had been expected," commented an analyst from a European brokerage who asked not to be named.

Air France-KLM late last month reported solid profit gains in line with analysts' forecasts for its first results incorporating fully the performance of the combined enterprise.

The airline reported that net profit rose 41 percent to EUR 201 million (USD 263.5 million) in the second quarter of its 2004-2005 business year.

That compared with EUR 143 million on a comparable basis in the same July-September period in 2003.

The company also said then that it "continues to target" a higher operating profit in the current full year than the pro forma result of EUR 350 million a year earlier.

© AFP

Subject: French News

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