Julian Moxon/PARIS
The French Government has launched the partial privatisation of Air France, with up to 17.4% of the airline's capital due be placed on the stock exchange in February.
The much-delayed privatisation will see the Government's 94% stake cut to around 64% initially, diminishing to around 53% once shares given to pilots in exchange for salary reductions are added.
Meanwhile, the second phase of the privatisation of Italian carrier Alitalia has been put off until at least the middle of the year by Italy's left-wing government, while another major European airline, Spain's Iberia, moves further down the road to full privatisation this week with the release of 30% of its capital to institutional investors.
Air France is by far the largest of the three carriers, and its share offering ends a year-long period of uncertainty. The airline's president, Jean-Cyril Spinetta, says that it is now in "extremely good shape" to attract investors. "We have an image similar to that of our main European competitors," he adds.
The government first announced the partial sell-off in February last year, but a crippling pilot's strike, coupled with the Asian financial crisis, ended hopes of an early valuation of the airline's assets. That figure is now put at between Fr15 billion ($2.47 billion) and Fr18 billion at the Fr78.7-Fr93.1 price likely to be quoted for the shares when they are placed on the Paris stock exchange on 22 February.
For the government, which between 1995 and 1997 was forced to recapitalise Air France with Fr21 billion, this would raise around Fr4 billion on the sale.
Net income at the end of the 1997/8 financial year was Fr1.87 billion - the first positive net result in almost a decade. Debt has been reduced progressively to Fr15 billion, and the first- half figures for the current year (April-September 1998) showed profits growth to Fr1.34 billion.
The delay in Alitalia's privatisation comes after Rome initially indicated that it would sell its majority stake in the carrier by the beginning of this year. In June last year, Government holding company IRIsold 20% of the airline to its employees, with a further 29% sold to private investors.
According to industry sources, doubts remain over whether a full or partial privatisation will be favoured. The decision centres on the role of the pilot-shareholders who, according to IRI, would have "significant management control" if the government decided to cut its stake to below 30%.
In Spain, the second-phase disposal of a further 30% of Iberia's capital comes after a first phase in which British Airways and American Airlines agreed to take a 10% stake, although final signature of the deal awaits confirmation that Iberia president Xabier de Irala will continue in that position.
The entire 94% government stake in the carrier, owned through holding company SEPI, will be ceded to the private sector.
Source: Flight International
