French state to cut stake in national airline

France's centre-right government set its ambitious privatisation programme rolling yesterday with an announcement that it planned to sell off a large chunk of Air France and cut the state's stake to below 20 per cent.

The sale, which could raise more than €1bn(£627m) for the government at current stock market prices, marked a change of style by a new government with few qualms about giving up control of a national flagship company born in 1933.

Air France was nationalised in 1945 and remains under state control after a partial sale by the former left-wing government that cut the state's stake to 54.4 per cent.

"The basis we are working on is that we go to just below 20 per cent," a spokesman at the Finance Ministry said, adding that the government hoped to have the terms of the sale ready by the end of the year.

The Finance minister Francis Mer issued a statement saying the state would remain a major shareholder and that legislation would be prepared to ensure Air France's traffic rights – in principle airport take-off and landing slots, and routes. The airline's hub is at Charles de Gaulle airport, north of Paris, and it has an alliance with Delta Air Lines of the US

The Prime Minister, Jean-Pierre Raffarin, is planningto sell off up to €40bn in state assets and has said this will include stake sales in politically sensitive firms such as the state energy giant Electricité de France (EdF).