Air France and KLM announced Tuesday that Air France has been successful in acquiring the Dutch airline, with 89.22 percent of KLM shareholders offering their holdings and thereby creating the biggest European airline.

Air France nonetheless extended its all-share offer to May 21 in a operation that also makes Air France-KLM the third-biggest carrier worldwide in terms of sales.

The takeover has the effect of reducing the French state's stake from 54 percent of Air France to 44.7 percent of Air France-KLM, a de facto privatisation of the French airline, the statement said.

Under terms of the exchange offer valid from April 5 to May 3, Air France had to acquire more than 70 percent of outstanding KLM shares, in a deal worth about 850 million euros (one billion dollars).

Trading in the new company is to begin Wednesday on the Amsterdam and Paris stock exchanges.

Air France will issue 45,938,857 new shares and 41,762,597 warrants, including 8,479,306 American Depositary Shares (ADS) and 7,708,460 American Depositary Warrants (ADW).

The warrants and the ADWs have a maturity of three and a half years from May 6, 2004 and can be exercised starting November 6, 2005.