Forte's bid faces political hurdle: EC watches as Air France sells Meridien

FORTE'S bid for control of the Meridien hotel chain is in danger of becoming embroiled in a diplomatic row between France and the European Commission over the refinancing of loss-making Air France.

The European Commission is keeping a close watch on the battle for control of the French hotel chain between Accor of France and Forte of the UK, which has made the higher bid. It is said to be keen to ensure that Air France does not sell to Accor for political reasons.

The airline announced last week that it was to delay its decision on the sale while it sent the bids to the privatisation commission, an independent body that advises the French government on privatisation issues.

The decision was seen by some as evidence of the pressure on Air France to sell the chain to a French buyer.

The announcement came as the airline predicted a Fr3.7bn ( pounds 442m) loss for the period from 1 January 1994 to the end of March 1995. This is an improvement on the Fr8.48bn loss reported in 1993.

The sale of the Meridien hotel chain is an important part of a rescue plan for the airline that includes a Fr20bn capital injection from the French government. But this would require European Commission approval, and is regarded as a test of French lobbying power in Brussels.