Air France-KLM and easyJet have withdrawn their offers to acquire parts of Aigle Azur (ZI, Paris Orly) after missing a court deadline to improve their bids, dealing a major blow to a government-backed plan to sell off parts of the business and increasing the likelihood of liquidation, La Tribune has reported.

An Air France spokeswoman confirmed to Reuters that it had decided not to submit a joint offer with long-haul carrier Air Caraibes Atlantique because “our conditions for doing so weren’t met”.

The unfolding bankruptcy of Aigle Azur, which had mined a niche serving Algeria and North Africa, follows a failed expansion of its long-haul routes. Air France and easyJet (U2, London Luton) had been lured by its lucrative Paris Orly slots and its flying rights to destinations beyond France.

But Air France would have had to appeal to its own unions for permission to waive internal rules that stop it from giving pilot roles to new hires.

easyJet also confirmed it had pulled out, with a source telling Reuters that it believed the deadlines were too short to fully assess the business and the risks.

Only during the bidding process has it emerged that Aigle Azur’s debts stretch to EUR148 million euros (EUR163.6 million), more than previously thought.

Lionel Guerin, a former Air France executive, tabled an offer before withdrawing it but has since submitted a new bid that includes a requirement for a EUR 15 million (USD16.6 million) loan from the French government, according to La Tribune.

Transport Minister Jean-Baptiste Djebbari said he remained in contact with all potential buyers in a “fast-changing situation”, in which bidders can legally cancel any withdrawal within 48 hours.