The French government is to sell almost half its stake in Air France KLM in a deal set to raise at least €700 million, sources said.
The sale will leave the French government with around a quarter of the former state carrier whose takeover of Dutch airline KLM earlier this year made it the world's largest airline by sales.
A French finance ministry spokesman confirmed the government was to sell part of its stake but declined to give details, saying a statement would be issued later today.
But word of the deal spread through financial markets as banks began unloading shares on behalf of the French state.
Investment banks Société Générale and ABN MRO were placing with institutional investors 49.48 million shares, or about 18.4 per cent of the company, banking sources said. And a French government source said it was selling around half of its current stake of 44 per cent.
At yesterday's closing stock price of €14.54 the sale of the 49.48 million shares would be worth over €719 million.
Speculation about a cut in the French state's stake has been increasing since the newly merged airline posted strong second-quarter results last month. The government's stake in Air France fell to 44.7 per cent from some 54 per cent at the time of the KLM merger in May.