The airlines agreed to give up take-off and landing slots on flights involving three continents, allaying European Commission concerns about what it called the "first real merger in the European airline industry."
Air France is spearheading an expected move toward consolidation in Europe's crowded airline sector, hoping to tap economies of scale and expand as the European Union prepares to grow from 15 to 25 nations in May.
The new Air France-KLM combination will move ahead of Japan Airlines System Corp. as the largest airlines group by revenue and rank third behind AMR Corp.'s American Airlines and UAS Corp.'s United Airlines in passenger traffic.
The United States, which worked closely with the Commission, said after Brussels acted that it would not oppose the takeover deal.
Air France shares rose 1.79% to 15.39 euros on Wednesday while KLM ended up 1.02% at 16.89 euros, its highest finish since May, 2002.
The approval for takeover came a decade after Air France nearly went bankrupt, staying alive only because it won permission from the Commission to receive $3.84 billion in aid from the French government.
The French state will own 44%, other Air France shareholders 37% and current KLM shareholders 19% of the enlarged company. Air France and KLM will retain their national identities, brands and hub airports.
KLM will remain Dutch and keep its international landing rights as the Dutch government and other entities will hold 51% of its voting rights for three years.