Over 89% of the share capital of the Dutch airline KLM was offered up to Air France by the time the bid closed on Monday night.

The marriage of the two carriers represents the first cross-border merger of major European airlines.

The deal was given the go-ahead by the European Commission in February, and was originally unveiled last September.

Air France-KLM will overtake Japan Airlines as the world's largest airline in the world by revenues and will rank third behind American Airlines and United Airlines in terms of passenger traffic.

Sky's the limit

The newly-merged company will own 100% of both airlines but KLM will remain Dutch, with 51% of its voting rights held by the state and two foundations, allowing KLM to retain its foreign landing rights.

Air France/KLM Air France flies 252 aircraft compared to KLM's 168 KLM carried 19.4m pasengers in 2002/03, while Air France carried 42.9m Total turnover for Air France last year was 12,280m euros against KLM's turnover of 6,960m euros

A joint holding company will be created to ensure the brands keep trading side by side for at least three years.

The airlines hope the merger will cut costs while boosting revenues as the industry battles growing competition from no-frills carriers.

They forecast 600 million euros in annual long-term merger benefits, but are playing down any risk to jobs.

Shares in a combined Air France-KLM are due to begin trading on Wednesday 5 May in Amsterdam, New York and Paris.

Analysts split

Many industry analysts have applauded the deal and have predicted other airlines in Europe and elsewhere could follow the trend in the next few years.

But others were concerned that the deal could limit Air France's flexibility in responding to external market shocks.

"It is a merger only in name as they are not combining large elements of their cost bases," said one London-based analyst.

"Given the structure I think they could run into trouble if there were an industry shock and they wanted to take out a lot of capacity and costs."

The deal cuts the French government's stake in the airline to 44.7% from about 54%.

Air France employees will hold 10.5% of the new company and former KLM shareholders will take 17.3%, while close to 45% of the company will be traded on the stock market.

A second acceptance period is now running until 21 May as Air France still needs to secure 95% of KLM to force a so-called squeeze-out of KLM minority shareholders and de-list the Dutch carrier.