The agreement, worth $4.7 billion, follows weeks of negotiations with the EU commission, which must ensure that state aid does not give companies an unfair advantage.
In return for the green light, the commission, which is the EU's anti-trust regulator, said Air France would relinquish about 18 slots per day at Orly, Paris' second-largest airport after Charles de Gaulle.
"This gives competing carriers the chance to expand their activities at this airport, ensuring fair prices and increased choice for European consumers," EU competition commissioner Margrethe Vestager said.
French Finance Minister Bruno Le Maire said the EU had also allowed the French state to raise its stake in the national carrier to 30 percent, up from the current 14.9 percent.
Air France posted a 7.1 billion euro ($8.4 billion) loss in 2020 as its business, like that of the rest of the world's airlines, suffered from coronavirus restrictions which all but grounded global air traffic.