Air France and KLM consider collaboration

Air France is in talks with the Netherlands-based airline KLM about a wide-ranging collaboration, to be underpinned by the French group taking a stake in KLM, the Financial Times has reported in its online edition.

An outline agreement could be signed before the end of the year, the report said.

The deal would underpin plans by the French government to reduce its majority stake in Air France and would take effect after the French government's share sale.

The collaboration being discussed between KLM and Air France should be much larger in scale than the partnership arrangement struck between Air France and Alitalia this year, under which each is to take a 3% stake in the other, according to the FT.

Any deal is likely to require the consent of the Netherlands government, which retains a 13% stake in KLM, it added.