Air France Faces New Strike Demand as Cuts Threaten Jobs

  • Ground-handling unions call for walkout over savings drive
  • Government minister issues appeal for further talksx

Air France unions responded to plans to shrink the carrier following failed productivity talks by threatening a new wave of strikes Friday as the government sought to play down the likelihood of job cuts.

The French unit of Air France-KLM Group said late Thursday it would need to eliminate weaker routes and shrink the fleet in the next two years after failing to reach a deal with pilots, raising the prospect of staff being fired, something Transport Minister Alain Vidalies said he’s keen to avoid.

While management will brief a works council meeting on the plans on Monday, the CGT, FO and UNSA ground-handling unions called for strike action. Air France-KLM Chief Executive Officer Alexandre de Juniac said any protests would be minor and pledged to stand by the cost-reduction strategy.

Air France-KLM said its board voted unanimously to direct Air France to start drawing up a program of cuts to deliver the savings rejected by pilots, who had been asked to work more hours for the same pay to help end annual losses that began in 2011. The French unit’s directors will meet later today.

Long-Haul Retreat

The alternative solution may mean “taking out as much as 10 percent of long-haul routes,” RBC analysts Damian Brewer and Andy Jones said in a note to investors. “We still see the door as ajar for the unions to come back to the table and we think this is still Air France’s preferred outcome,” they said.

French Economy Minister Emmanuel Macron lent support to management, calling on pilots to “assume their responsibilities” and saying Air France needs reform to survive. Speaking in Paris after meeting De Juniac, the Socialist minister urged further talks to avoid job cuts that will otherwise be discussed Monday.

“I regret that talks until now didn’t produce results,” Macron said. “The decisions taken by the board of Air France-KLM lead to a Plan B that’s less good than the plan initially presented. I call upon each of the parties involved, particularly the pilots, to take on their responsibilities.”

2,900 Jobs

De Juniac had said in an interview with Europe1 radio earlier that the door has closed on further pilot talks, though didn’t rule out a return to negotiations later. Some 2,900 jobs may be at risk, Agence France Presse reported, citing unions, something the CEO wouldn’t confirm.

Air France has never recently fired workers outright, relying on attrition and early retirement packages to reduce the payroll by 9,000 over three years. The last time it sought to dismiss workers in 1993, weeks of walkouts cost the job of CEO Bernard Attali.

De Juniac faces a new showdown with pilots after last year being defeated in his plans to establish a low-cost airline outside of France when crews walked out for two weeks, costing the airline 500 million euros ($564 million) and prompting the government to intervene.

Vidalies said Thursday he would prefer to “protect jobs,” though Prime Minister Manuel Valls said staff, “notably the pilots,” should assist in efforts to restore profit. France owns 15.88 percent of the parent company.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE