updated 12/9/2004 9:47:18 AM ET 2004-12-09T14:47:18

The French government said Thursday it is selling a 17.7 percent stake in Air France-KLM, the world's largest airline, in a move that will help the state reduce its debt and scale back its influence on the Franco-Dutch carrier.

A Finance Ministry spokeswoman said the government asked two banks, France's Societe General SA and the Netherlands' ABN Amro Holding NV, to handle the sale of the stake involving some 48 million shares.

Using Wednesday's closing price as a benchmark, the stake would be worth about euro693 million ($930 million).

Air France-KLM shares fell 1.6 percent in early trading Thursday.

The French state lost majority control of Air France earlier this year as a result of the company's merger with KLM Royal Dutch Airlines. Before Thursday's sale, the state still owned 44 percent of the joint company; with the selloff, its stake will decline to about 26 percent.

The government has indicated it eventually plans to cut its share to about 20 percent, and Finance Minister Herve Gaymard said the latest selloff came Thursday "because we felt the market conditions were right."

The sale was the latest in an ongoing effort by the French government to sell off assets to reduce its debt.

Earlier this year, it sold stakes in state-owned jet engine maker Snecma and in France Telecom, and the government has said it plans to sell holdings in the Electricite de France utility and nuclear engineering group Areva next year.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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