Air France Cancels More Than Half Its Flights on Pilot Strike

Air France canceled more than half its flights on day two of what may become the airline’s most disruptive strike since 1998, as pilots protest measures aimed at cutting costs.

The airline flew 47 percent of scheduled flights as of 11 a.m. Paris time, more than yesterday’s 40 percent, as pilots walked out to protest plans to expand low-cost operations with flight crews paid less than at the main carrier. A strike planned for today by Deutsche Lufthansa AG pilots was canceled.

“We’re continuing to inform passengers in real-time about possible flight changes, and about alternatives that we’re able to offer,” Catherine Jude, director of operations at Air France, a unit of Air France-KLM Group, told reporters today at Charles de Gaulle Airport.

The strike threatens to undermine efforts by Air France executives to bring costs in line with discount rivals such as EasyJet Plc, now France’s second-biggest airline, and Ryanair Holdings Plc, which has bought higher-capacity aircraft that will help cut fares. Air France has lost money on brief flights for years and aims to change that by developing a short-haul business through its Transavia leisure unit.

Air France expects to ensure that at least 40 percent of flights take off tomorrow, given that 60 percent of pilots are striking, the airline said. The labor action is currently planned to run through Sept. 22.

Between 65,000 and 70,000 passengers were affected yesterday by cancellations or delays, Air France-KLM Chief Executive Officer Alexandre de Juniac said at a briefing in Paris.

Air France shares fell 3.8 percent to 7.95 euros as of 12:53 p.m., taking the three-day decline to almost 8 percent.

Strike Costs

The dispute is costing the airline 10 million euros ($13 million) to 15 million euros a day in earnings before interest and taxes, Juniac said. The Air France unit, which lost money last year, may continue to do so this year as the dispute derails a previous plan to be profitable.

Former Dutch charter unit Transavia has already expanded into France and will move to bases around Europe with a fleet that could double in size, the company said last week. It confirmed plans that unions say will prompt job losses and pay cuts at the main airline.

While pilots at the mainline Air France unit fly about 500 to 600 hours a year, their counterparts at the French Transavia carrier fly 700 to 750 hours, Juniac said.

Pilots at Transavia Europe may be working even longer hours, as Juniac has said costs will be lower at the new operation.

Wage Dispute

Air France’s SNPL union wants pilots across the company to be paid the same wages and have the same working conditions. De Juniac said Sept. 11 that if pilots don’t accept the company’s strategy, expansion of Transavia’s French unit may be put on hold. Flights could be added through a new Transavia Europe division that might be based elsewhere.

The strike could be Air France’s worst since an eight-day walkout in 1998 over the French government’s plan for an initial public offering of the airline.

Air France flights operated by other airlines, including Hop!, KLM and Delta Air Lines Inc., a partner in SkyTeam, aren’t affected by the strike.

Lufthansa, Europe’s second-biggest airline, avoided a walkout by pilots today after the Vereinigung Cockpit union agreed to return to talks over retirement benefits. Like Air France, the German airline is trying to bring costs into line with carriers such as Ryanair, Europe’s discount leader.

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