Julian Moxon/Paris

Christian Blanc has resigned as Air France chairman because the recently elected French Government has refused to press ahead with privatisation of the state-owned airline.

Blanc says that he has a "moral contract" with the Government to proceed with privatisation, arguing that it forms a vital part of the restructuring necessary to make the carrier competitive.

Recent talks between Blanc and France's new communist transport minister, Jean-Claude Gayssot, collapsed over the issue of privatisation. Gayssot appears to have cooled on earlier apparent opposition to any form of outside investment, but still insists that the state should retain a majority 51% holding. Blanc resigned, warning that, if Air France remains state controlled it will remain handicapped in attracting alliance partners.

Air France has been negotiating new strategic links, including deals with Continental Airlines and Delta Air Lines. Sources close to the airline say that this may now be threatened.

"The owner proposes a radical change of orientation. If the Government maintains its position, and I think it will, that will constitute a break in my contract," says Blanc, referring to his "mandate" from the previous right-wing Government to privatise the carrier by the end of 1998. The incoming socialist Government says that Blanc "-cannot behave as if he is president of a private concern, and even less as if he is the owner".

His departure is expected to be confirmed on 12 September, when the merger between Air France and its former Air Inter domestic subsidiary (now trading as Air France Europe) is completed. Suggested replacements include ex-Air Inter president Cyril Spinetta and Airbus chief Jean Pierson.

Under Blanc, the main Air France airline returned a profit over the last 1996/7 financial year, but net losses persisted at its domestic subsidiary. The latest indications are that the recovery has been continuing. Group figures for the first four months of this financial year to July show a rise in sales of 7.6% and a 6.4%rise in passenger yields.

Source: Flight International