The French government will convert a 3 billion euro loan extended to the group last year into a hybrid instrument and commit up to an additional 1 billion euros to a planned share issue, raising its stake in Air France-KLM to almost 30%.
"This will make the state Air France's biggest shareholder," French Finance Minister Bruno Le Maire said on France Inter radio, calling the move a "sign of commitment" to the airline and its French jobs.
Air France-KLM is expected to convert part of its 4 billion euros ($4.7 billion) in direct government loans into hybrid instruments and raise new equity capital under the plans to be announced by Tuesday morning, the sources told Reuters.
After drawn-out talks with Brussels over the number of take-off and landing slots at Paris-Orly airport to be given up by Air France in return for renewed aid, France's finance minister said on Sunday a compromise agreement had been reached.
The airline group, which received a 10.4 billion-euro ($12.3 billion) bailout to weather the coronavirus crisis last year, plans to convert 4 billion euros in French and Dutch government loans into hybrid "quasi-equity".
"We are nearing a deal," Finance Minister Bruno Le Maire said on France Info radio, predicting a final agreement within "a matter of days".
The expected deal would see Air France give up fewer airport flight slots at its Paris base than initially sought by the European Commission, notably at Orly airport, the newspaper said in a report published late on Friday.
The Air France-KLM group recorded a 7.1 billion euro ($8.38 billion) net loss for last year.
Le Maire also told reporters at a briefing that he wanted any future remedies for Air France to be of a sustainable nature for the airline.
Earlier this month, Air France and its pilot unions had protested against EU demands that the airline give up takeoff and landing slots at its Paris base in return for government aid.
"Some readjustments will be necessary for Air France," Le Maire said on Thursday following media reports that the airline plans to eliminate 8,000-10,000 jobs.
