Air France is on course for a stock market flotation of a 20% stake in the first quarter of 1999 but despite pressure from its US partners, the carrier is still equivocating on an alliance.

This was the airline's position as outlined by chief executive Jean-Cyril Spinetta, following the announcement of a 24% fall in profits. Air France has just made a net profit of Fr1.3 billion ($232 million) for the half year ending September, compared to Fr1.7 billion for the same period the previous year. Operating revenues and load factors were roughly constant, while traffic grew by over 5% in the first six months. The carrier has cut its debt by more than Fr1 billion to Fr14 billion. However, yields fell by 2.7% largely because of the recent expansion of its long-haul network.

As expected, the airline's results were savaged by the month-long pilots strike this June, which cost the carrier Fr1.3 billion, and without which it would have made a record profit.

The airline has began discussions with managers and agents to implement its "Business Plan" for 1999-2002 which will seek to implement the Fr3 billion cost reduction programme of which Fr500 million has already been agreed with pilots.

Independent valuations of the company, thought to be worth $16 billion, began in December by Credit Agricole-Indosuez, Morgan Stanley.

Source: Airline Business