Shares in Air France began trading on 22 February and were expected to rise by up to 10% following an over-subscribed partial privatisation which is described by consultants to the offering as "a big success".
British Airways (BA) and American Airlines have meanwhile agreed the terms of their long-awaited acquisition of a 10% stake in Spanish flag-carrier Iberia, which has simultaneously been welcomed into the carrier's oneworld alliance.
Air France was valued at Fr20.5 billion ($3.5 billion) following the setting of its flotation price at about Fr92 ($16) per share - a figure far exceeding earlier valuations of between Fr15 billion and Fr18billion.
The rise in the carrier's worth stems from the massive investor interest in the privatisation, with the offer attracting 10 times more applications than expected.
Institutional investors received 21 million shares in an offering between 27 January and 9 February, after which the carrier's share price was set at Fr91.8. The main Air France pilots' union, SNPL, claims to have been "duped" by the valuation, having agreed a salaries-for-shares deal based on a price of Fr85.2.
The private offering of 13 million shares took place between 10 February and 17 February. Consultants Dominique Barbarin of Gavin Anderson says public and institutional sales were "a big success". Some 3.5 million shares are also being made available to overseas applicants.
As Trading in Air France stock was due to begin, sources close to the privatisation suggested prices could rise by as much as 10%.
Even after the partial privatisation, which will also see shares distributed to pilots, other Air France employees and the BNP bank, the French Government will retain a 51-53% stake in the airline.
Finance minister Dominique Strauss-Kahn says this is unlikely to be reduced in the foreseeable future. "Air France will remain a public company", he says, adding that the sale is a "clear statement of confidence" in the airline.
Spain's Iberia has meanwhile formally joined the oneworld alliance following the completion of the latest stage in its own privatisation process.
Industrial state-holding company SEPI has signed an agreement with oneworld carriers British Airways and American Airlines for the sale of a 10% stake in Iberia - with 9% going to the UK flag-carrier and 1% to AMR.
Most elements of the deal - including the share carve-up - were finalised some time ago, with the amount of management influence to be granted to the two investors understood to have been the main sticking point.
According to the final agreement, BA and American - which have pledged to retain their holdings for at least three years - will be given two seats on the Iberia board, and will be represented on the board's delegated committees. The cost of the acquisition, to be based on the entire company's 580 billion peseta ($3.93 billion) worth, is dependent on the valuation of the Amadeus reservations system, in which Iberia owns a 29.2% stake, but will be roughly equivalent to $400 million.
The effective handover of shares will take place simultaneously with the acquisition of equity in Iberia by institutional investors, for which SEPI has reserved 30% of stock. The airline says remaining shares will be offered to the public "in the course of 1999".
Iberia becomes the seventh member of oneworld, and although it does not technically join the alliance until later this year, it has already completed a deal with BA which will see the two carriers codeshare on routes between Spain and the UK and beyond to Latin America.
Iberia already has a codeshare agreement with American.
Source: Flight International
