French Minister Warns Air France Will "Disappear" Unless Crisis Stops

08 May, 2018, 01:05 | Author: Dominic Spencer
  • Air France shares in tailspin after minister warned loss-making airline could disappear as staff stage 14th walkout demanding 5% pay rise

Jean-Marc Janaillac, CEO of Air France-KLM Group, attends a news conference in Paris on May 4, 2018.

Monday's walk-out is the 14th day of action, as staff press for a 5.1% salary increase this year.

During Janaillac's tenure, Air France-KLM struck deals with Delta Air Lines DAL.N and China Eastern 600115.SS , which each acquired stakes of just under 9 percent.

Shares in Air France fell 14 percent on Monday and the airline canceled 15 percent of its flights due to an ongoing labor issue and the weekend resignation of the CEO.

Air France-KLM is one of Europe's biggest airlines, but has seen a series of strikes in recent weeks.

He added: "The challenge is the survival of Air France, the development of a company to which we are all attached".

"Those who think that, whatever happens, the state will come to the rescue of Air France and mop up the losses of Air France are wrong", said Mr Le Maire.


Air France's share price plunged almost 13% at the open on Monday and was trading 10.9% lower at 7.21 euros in the early afternoon in Paris amid questions about its future management and direction.

"Air France will disappear if it does not make the necessary efforts to be competitive", he said, ruling out any government intervention to cover the company's debts.

France's economy minister on Sunday warned that the survival of Air France was now in the balance and could "disappear".

CEO Jean-Marc Janaillac's attempt to cut costs at the carrier to keep up with competition from budget airlines and Gulf rivals ran into strong union resistance, as had his predecessor's efforts, raising questions over its ability to reform. On medium-haul flights to and from Paris-Charles de Gaulle, the percentage drops to 80%, while it expects to operate 87% of short-haul flights to and from Paris-Orly and the rest of the regional airports.

Others, including the more moderate CFDT union, which had urged Air France to back management's pay proposal, warned that "dialogue was blocked" and said the SNPL was too inflexible.

Unions want a 5.1% pay rise this year, arguing that their wages have been frozen since 2011 amid restructuring and noting that the company's profits are up.

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