The final elements of the merger of Air France and its domestic subsidiary, Air France Europe, went ahead as planned on 12 September. The move followed the resignation of the national carrier's president, Christian Blanc, over the Government's refusal to privatise the airline (Flight International, 10-16 September).

A decision on how much of Air France's capital will now be made available to outside investors has been put off until the end of the year, at the earliest. French minister of finance Dominique Strauss-Kahn says that the Government's sell-off of a stake of up to 49% in the airline "-will allow international alliances to go ahead" - a view not shared by Blanc, who made a Government commitment to full privatisation a condition of his remaining as president.

Blanc had agreed to an initial 49% share being privatised, conditional on the rest being privatised later, but this proved unacceptable to Communist transport minister Jean-Claude Gayssot. In his resignation speech to the workforce, the former president said: "The clocks are ticking away-there is no time to lose". Privatisation is "necessary" for the development of Air France, he added.

The carrier already has numerous commercial alliances in place, including ones with Delta Air Lines, Continental Airlines, Indian Airlines, Alitalia and, most recently, Aeroflot Russian International Airlines. The French airline says that these would "-form the basis of future strategic alliances", although many in the industry doubt the willingness of privately owned airlines to commit to such partnerships with an airline remaining under state control.

Noting that all major European airlines have been, or are, in the process of being privatised, Blanc says: "The shareholder has the absolute right to consider that Air France can remain the West's last major airline to be state-owned,"

In an interview with French financial newspaper La Tribune, Gayssot says that he is "-in favour of autonomous management- but I do not know a majority shareholder in the world which does not take an interest in strategy". He insists that, while the strategy must centre on continued improvements in the balance sheet (Air France is expected to turn in a Fr1 billion [$166.6million] profit for this financial year), "-I do not consider that financial health is the precondition for good economic management".

Further resignations have not been ruled out. A senior administrator on the board of directors, Marc Ladreit, has already departed, attacking the Government's position as a "-brutal interruption in the recovery plan being undertaken by Christian Blanc".

A decision on the next president is likely "in a few days", according to an airline source.

Source: Flight International

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