Jean-Claude Gayssot, the communist transport minister, intervened to urge Mr Blanc to stay on in the post, but effectively ruled out selling a majority stake in Air France. "The state must keep a majority even if an opening up of the capital is not ruled out," the ministry said.
The left-wing coalition, which won a surprise election victory in May, immediately put on hold the privatisation plans of the outgoing conservative regime. They included the sale of Aerospatiale, the aerospace giant and its merger with Dassault, along with the sell-off of France Telecom, which was in its advanced stages.
The latest row exploded after Mr Blanc told a French radio station that if the government decided not to proceed with the sell-off it would "constitute a breach of contract". Air France sources said yesterday Mr Blanc was insisting the government sold a majority stake in the airline, though he was flexible about when and how it was done.
Mr Gayssot had pledged that he would not be "minister of privatisations" after his appointment, but in recent weeks speculation had mounted that the cash-strapped government was prepared to compromise. Mr Gayssot had said on Tuesday that his plans did not "presuppose either privatisation or maintenance of the status quo".
Mr Blanc is credited with boosting Air France's financial fortunes. The airline made its first profit in 1996-97 for seven years, though the turnaround was only achieved with a controversial Fr20bn (pounds 2.1bn) state aid package.
The subsidy led to angry protests to the European Commission by British Airways. The EC subsequently approved the package, partly on condition that the government eventually privatised the carrier.
However, this is not the first time the idiosyncratic Mr Blanc has run into conflict with the French government, or threatened to resign. Observers yesterday doubted whether he would carry out the threat.
Last year he said he would leave the job after Bernard Pons, the former transport minister, said he wanted Air France to buy only Airbus jets. The airline insisted it needed Boeing 777s. Another resignation threat came when pilots consideredstrike action over proposals to change their salary structure.
Mr Blanc's relations with the previous conservative administration were apparently no better than with the socialists. He refused to deal with Mr Pons after his appointment in 1993, preferring to speak only to Alan Juppe, then the prime minister.Reuse content