LaTribune.fr reported the pay deal could be proposed to unions on Friday. An Air France spokeswoman declined to comment on the matter.

Air France KLM shares were up 5.3 percent, although the stock remains down nearly 40 percent so far in 2018, mainly due to the impact of staff strikes over pay that have cost the airline over 300 million euros ($346 million).

Benjamin Smith took over as Air France KLM's chief executive last month. Smith faces having to overcome union resistance to reduce the French unit's swollen cost base while keeping increasingly frustrated Dutch staff on side.

The French state has a 14 percent stake in Air France KLM, while Delta Airlines and China Eastern Airlines each hold an 8.8 percent stake.

(Reporting by Cyril Altmeyer; Additional reporting by Blandine Henault; Editing by Sudip Kar-Gupta)