Air France and KLM in merger talks

Air France is in merger talks with Dutch counterpart KLM that could see the French government float shares in KLM rather than sell part of its capital in the national carrier.

The French government controls 54.4% of Air France stock but has expressed a desire to reduce that to under 20%.

KLM posted losses of €416m last year and is believed to welcome talk of a tie-up.

According to French banking sources the deal could be announced in the next few weeks.

Air France and the French government want to clarify issues surrounding air traffic slots, licences and the use of the Paris and Amsterdam hubs before making an offer.

Meanwhile, Finland’s national carrier Finnair saw its shares trade up 3.4% after announcing it has bought an 85% stake in Swedish airline Nordic Airlink.