Shares in Air France-KLM slumped 8.5% on Monday September 9 amid speculation that the group's French carrier could step in to rescue bankrupt airline Aigle Azur.
Junior transport minister Jean-Baptiste Djebbari told newspaper Le Parisien that Air France "wanted to make an offer" and that the former chief executive of Air France's budget unit Hop! had put together a team with financial backing.
Air France had "expressed an interest in Aigle Azur and the government is likely to push them to get involved," one market trader told Reuters in response to the share price move.
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"Aigle Azur's market is solid. So it needs a serious buyer, able to save the maximum number of jobs possible," Djebbari told Le Parisien. London-listed easyJet was also studying the dossier, the minister said.
Financial daily Les Echos reported that Air France had put forward the "leading offer".
The slump in Air France-KLM shares also came after the release of the Franco-Dutch group's August traffic data, which showed load factor and cargo activity down during the month.