=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2003/02/12/f= inancial1522EST0183.DTL ---------------------------------------------------------------------- Wednesday, February 12, 2003 (AP) Government begins process of shedding control of Air France NATHALIE SCHUCK, Associated Press Writer (02-12) 12:22 PST PARIS (AP) -- The government took its first formal step Wednesday toward giving up control of Air France, introducing legislation in the Senate to end its majority ownership of the airline. "We have to give a new chance to Air France," Transport Minister Gilles = de Robien said as the Senate began considering the legislation. He said the privatization would be "progressive" and could get started "= in mid-2003 or the end of 2003, as soon as the market permits." The state owns 54.4 percent of Air France, and the minister said last month that the government wants to sell between 30 percent and 35 percent of the flagship carrier. The daily newspaper Le Figaro reported Wednesday that the state could decide to put only 5 percent of its shares on the market initially to cushion the airline in uncertain times. "We are going to cede capital progressively," de Robien said without bei= ng more specific. "We're taking our time to negotiate, to prepare, until summer." Air France shares currently trade at about 8.5 euros ($9), falling from = 14 euros when first put on the market. "We're not going to have a fire sale at 8 euros (dollars) a share," de Robien told the Senate. The start of the process to end majority ownership got underway as Air France announced a third quarter profit for 2002 of 2 million euros ($2.1 million) in contrast to a loss of 131 million euros a year earlier. France's national carrier said its performance in the traditionally weak third quarter, which ended in December, confirms its target of improving its fiscal 2003 performance. It had an operating profit of 2 million euros ($2.1 million) in the quarter before aircraft disposals in contrast to an operating loss of 114 million euros a year earlier. Analysts had expected Air France to post an operating loss in the period of 6.7 million euros ($7.17 million). De Robien said the state would keep its place on the board of directors after giving up majority ownership of Air France. The minister said that opportunities for alliances "must be seized." Air France is already a member of Sky Team with its partner Delta Airlines. Among other things, the legislation to privatize Air France provides guarantees for the company's 70,156 salaried employees, maintaining their current protection for two more years while a new company workers' agreement is negotiated. Employees currently hold nearly 12 percent of shares and could gain up to 15 percent under the bill. The legislation ensures that the airline will not fall into totally foreign hands once privatized with a stipulation that no more than 45 percent of the capital can be held by a nonmember of the European Union. Air France has weathered better than some other airlines the traveler's trauma that followed the terror attacks of Sept. 11, 2001. Air France said the current quarter got off to a rough start due to a January snowstorm that grounded some flights and a pilots' strike earlier this month that led to a loss in earnings of 12 million euros ($12.8 million). Air France had net debt of 2.96 billion euros ($3.16 billion) at the end of December. On the Net: Air France: www.airfrance.com =20 ---------------------------------------------------------------------- Copyright 2003 AP