French hotels group Accor confirmed on Monday that it was in talks to acquire all or part of the French government’s 14.3% stake in Air France KLM.  The French state stake in the Franco-Dutch airline is worth about  €420m based on current share value.

Paris paper Les Echos broke the story on Sunday, but there was no immediate comment from any of the parties involved. French media leaked the story to test market reaction, the Telegraaf reported.

Accor said Air France KLM and the hotel group have the same customer base and could benefit from shared digital services and loyalty platforms.  Accor has 4,300 hotels in 100 countries under 25 brands ranging frm Raffles and Sofitel to Mercure and Ibis.

The airline has been navigating through turmoil in recent weeks with the sudden departure of its CEO Jean-Marc Janaillac and 15 days lost to strikes which cost Air France an estimated €400m.

Janaillac said the French government’s shareholding was a major obstacle to reform as employees believed wrongly that the government would rescue the carrier from bankruptcy.

Profitability

KLM now has the upper hand in troubled Air France KLM, Europe’s second largest airline group.  The Dutch carrier’s strong cards include its profitability: in the 2018 first quarter KLM booked operating profit €32m higher at €60m. Air France posted operating losses of €178m in the same period.

Also, KLM and its Transavia subsidiary carried 4.3 million passengers in April, putting the Dutch arm ahead of Air France which moved 3.9 million passengers in that month.

This was the first month since the ‘merger’ that the Dutch arm flew more passengers than Air France. This was due entirely to ‘eight days of strikes at Air France’ in April, the combine said.

Les Echos said the government was studying three options for its stake in the airline partnership. The first one would be to sell the whole stake to Accor Hotels. The second option would be a partial sale which would keep some state influence at the company.

A third option would result in a swap of Air France shares with Accor, in which the state would get a stake in the hotel group, Reuters reported.