By Jason Chow 

Plane maker Airbus Group said Friday it sold EUR794 million ($990 million) worth of shares in French defense and private jet manufacturer Dassault Aviation back to the company and has plans to further decrease its stake by mid-next year.

The transaction, along with plans by Dassault to cancel 9% of treasury shares, means that Airbus has effectively reduced its stake in Dassault to 42% from 46%.

Airbus said it plans to sell another 10% of Dassault's total shares by the end of June 2015 through private placement deals. Dassault will be offered to buy back half of each portion of shares sold, up to 5% of the total number of shares.

Airbus, which is focused on making commercial planes, has been under pressure from shareholders to sell its Dassault stake for a long time.

In August 2013, The Children's Investment Fund Management (UK) LLP, one of the world's largest activist investment companies, advocated for Airbus, then known as EADS, to cash out the Dassault stake and return the proceeds to shareholders.

Selling Dassault shares is a complicated affair for Airbus, requiring the consent of both Dassault and the French government. The stake in Dassault, known best for its Rafale combat fighters and Falcon business jets, is a legacy from the company's founding in 2000. Aerospatiale, a French state-owned company that was one of the companies that eventually was folded into the present-day Airbus, was previous owner of the stake.

The French government said in a statement later Friday that it has signed a 20-year agreement with the industrial group Marcel Dassault--the majority shareholder in Dassault Aviation--to protect the interests of the state, particularly regarding matters of nuclear defense. The agreement also gives the state the right of first refusal on the sale of shares that would lead to Marcel Dassault losing its controlling stake in Dassault Aviation.

Dassault shares rose 7.1% on Friday to close at EUR1,079. Airbus closed down 1.6% at EUR49.

William Horobin contributed to this article.

Write to Jason Chow at jason.chow@wsj.com

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