By Laurence Frost
PARIS (Reuters) - Shares in Air France-KLM (PA:AIRF) fell sharply on Monday after a French minister named Air France as a bidder for bankrupt carrier Aigle Azur, which left 19,000 passengers stranded after abruptly halting operations.
The French unit confirmed it had bid for all or part of Aigle Azur - without saying which - as rival Easyjet announced it had expressed interest in some operations of the budget carrier, which was placed under bankruptcy protection on Sept. 2.
The Franco-Dutch carrier's stock had fallen as much as 9.6% earlier in the day after junior transport minister Jean-Baptiste Djebbari said the group "appears to want to make an offer" for Aigle Azur.
The budget carrier's two biggest shareholders are China's HNA Group, with around an 48% stake, and Brazilian entrepreneur David Neeleman with a 32% holding.
Higher fuel costs and stiffer low-cost competition have led to a wave of bankruptcies among smaller European airlines in the past three years, including Air Berlin, Germania, British-based Monarch, Latvia's Primera Air and Swiss SkyWork.
Aigle Azur's difficulties were compounded by its over-expansion from medium-haul services focused on Algeria into long-haul destinations such as Brazil.
The French state, keen to drum up interest and save Aigle Azur's 1,200 jobs, had also flagged potential bids from Air Caraibes parent Dubreuil Group and an investor group led by Lionel Guerin, former head of Air France's Hop! unit.
French Finance Minister Bruno Le Maire said on Friday that a "principal offer" for Aigle Azur was being considered. The bankrupt carrier's works council was due to meet on Monday afternoon to consider the offers received.
Government influence over Air France-KLM, in which France holds a 14.3% stake, added to investor concern that had driven its shares 8.7% lower by 1214 GMT, with one trader telling Reuters the state was "likely to push them to get involved".
Officials turned to Air France-KLM as early as April, after Aigle Azur sought help from a government agency, according to financial daily Les Echos. Its interest was piqued after the struggling carrier discussed selling take-off and landing slots at Paris Orly to Spain's Vueling, the paper reported.
Air France has scrambled extra Algeria flights to help repatriate the 13,000 Aigle Azur passengers still stranded by the collapse. Most will have reached their destinations by the end of the week, the junior transport minister said.