Air France planes are parked on the tarmac at the Charles de Gaulle International Airport in Roissy, near Paris. The airline’s top managers offered to postpone the roll-out of its low-cost operation Transavia outside France and the Netherlands until the end of the year in a bid to end the strike costing it millions of euros a day.
Reuters
The head of Air France-KLM offered yesterday to postpone roll-out of its European low-cost operation until the end of the year in a bid to end a week-long pilots’ strike costing it millions of euros a day.
Setting out what he called a “final proposal”, Alexandre de Juniac told Le Monde daily the aim was to buy time for detailed negotiations with pilot representatives on the plan.
“We are proposing to suspend until the end of the year the project to create Transavia units in Europe outside France and the Netherlands. That will create time to carry out a thorough dialogue on the plan and to formulate the necessary guarantees with unions,” he said. But he stressed: “This arrangement must not call into question our ambition to develop Transavia, which is one of the key sources of growth for the Air France-KLM group”.
De Juniac said the strike was “disastrous” for the group, battling to fight off competition from low-cost rivals.
At 0943 GMT, Air France shares were 1.55% lower at €7.935 after having shed up to three per cent early yesterday. The strike over the airline’s plans to establish low-cost activities outside France is entering its second week and set to be the longest such industrial action in its history. The main SNPL union has extended strike action to September 26 and a second union, SPAF, to tomorrow with an option to extend further. Earlier, the French government made a renewed appeal for a quick end to the strike and urged management to “clarify” their proposals.
“Service must resume now,” Jean-Marie Le Guen, minister in charge of relations with parliament, said ahead of the latest round of talks due on Monday between unions and management. “Very quickly, the management must make a certain number of clarifications on their proposals,” he added.
The expansion of Transavia is part of a new plan unveiled this month aimed at boosting earnings. The proposals would see Transavia’s fleet rise to 100 jets by 2017, from about 50 now, and the number of passengers more than double to 20mn.
Air France, part of Air France-KLM, expects 41% of its flights to operate yesterday. SNPL said ahead of yesterday’s talks that negotiations reached “a complete impasse”. The industrial action began on September 15, and Air France estimates it is costing the company €10mn to €15mn ($13mn-19mn) a day, implying the cost of the walkout could rise to as much as €180mn by September 26. Air France-KLM is currently expected to post 2014 earnings before interest, tax, depreciation and amortisation (EBITDA) of €2.28bn and pre-tax profit of €79mn, according to the average of analysts’ estimates on Thomson Reuters Eikon.