Air France-KLM tumbles on reported interest in Aigle Azur

Air France-KLM shares fell sharply on Monday amid reports suggesting that it might be set to table a bid for struggling regional carrier Aigle Azur even as the company warned of the toll that softer economic conditions were taking on its own business.

French junior transport minister Jean-Baptiste Djebbari told newspaper Le Parisien that Air France, in which the state owned a 1.3% stake, apparently "wanted to make an offer".

Also according to Djebbari, the former chief executive of Air France’s budget unit Hop!, Lionel Guerin, had put together his own team and secured financial backing for a bid.

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. Also according to Reuters, the French state had also flagged Easyjet and Air Caraibes as other potentially interested parties in making a bid.

Earlier, France's flag carrier had reported that "close-in bookings in the peak travel period are weaker than foreseen in view of softening macro-economic environment."

The airline posted a 1.2% increase in passenger traffic for August in terms of revenue per kilometre on a 1.6% rise in capacity.

Aigle Azur had 1,200 staff.

Shares of other European airlines including easyJet (-2.88%) , International Consolidated Airlines Group (-2.09%) , Ryanair Holdings (-0.75%) and Deutsche Lufthansa (-1.59%) were all dragged lower by the news.