Air France expects to raise between 3.5 billion French Francs and FFr4 billion (IR£480 million) when it makes its stock market debut, with an initial public offering expected to take place in the first half of 1999.

Jean-Cyril Spinetta, chairman of the French national carrier, who disclosed the figure, declined to say what proportion of the capital this would represent. However, in February, the French government said "up to around 20 per cent" would be sold.

With the partial privatisation of Aerospatiale, the aerospace group, widely expected in March or April, the exact timing of the Air France flotation is still uncertain.

But Mr Spinetta emphasised that the company, which recently reported net attributable first-half profits of FFr1.34 billion in spite of the impact of a damaging pilots' strike, was ready.

In addition to those sold on the market, Mr Spinetta said Air France employees would be offered shares representing about 3.5 per cent of the company's capital.

Air France pilots, meanwhile, would additionally take up to 12 per cent of the capital through an agreement reached this year, giving them shares in return for what are, in effect, wage cuts.

The success of the Air France flotation will be closely watched in Ireland, where a flotation of Aer Lingus shares on the market is one option being examined by group management as a means of raising capital.

The French state's current 95 per cent stake in the airline stands to be diluted next year when BNP, the French bank, can exercise a right to take a 4-5 per cent interest in payment for previous loans.

According to Mr Spinetta, once all these operations are taken into account, the state's holding in the company could fall to between 51 and 53 per cent.

The Air France chairman recently indicated that 1999 was also likely to be the year in which the company decided which of its two US partners, Continental Airlines and Delta Air Lines, it would join in a new airline alliance.

The French carrier has code-sharing agreements with more than 20 airlines worldwide but is not yet in any global partnership. Aer Lingus is also seeking to join one of the major international alliances and a recent report from company management also raised the possibility of a flotation for the Irish group on the stock exchange.

This would be an option for the Irish airline to raise capital, as would the sale of some of its shares to a major international airline as part of the move towards an alliance, with a major US carrier the most likely partner.