Paris, May 04: Air France has acquired Dutch airline KLM in a deal that creates the biggest European carrier and the number one worldwide in terms of sales, both companies said today in a statement.

offering their holdings thereby creating the biggest European airline. The takeover is a major consolidation within the European air transport industry and comes a decade after EU competition officials stepped up pressure on governments to open their domestic markets in the interests of consumers.

Air France has flown a long way since a controversial rescue in 1994 which was fiercely opposed by other European carriers, including KLM.

But mooted plans to take other airlines under its wing, in particular the Italian carrier Alitalia, have been grounded, Air France Chief Executive Officer Jean-Cyril Spinetta told reporters today.

Air France and KLM said that 89.22 per cent of KLM shareholders had accepted the Air France takeover offer, tendering their shares in a swap estimated to be worth about 800 million Euros (950 million USD).

The offer has now been extended to May 21, but the statement said: "Today, Air France declares the offer unconditional."

Shareholders are to receive 11 Air France shares and 10 Air France warrants for every 10 ordinary KLM shares exchanged.

The operation has already had the effect of reducing the French state`s stake from 54 per cent of Air France to 44.7 per cent of Air France-KLM, a de facto privatisation of the French airline, the joint statement said.

Bureau Report