Air France under threat amid strikes: Economy minister

Calvin Saunders
May 8, 2018

The share price woes follow the resignation on Friday evening of Air France-KLM chief executive Jean-Marc Janaillac after workers rejected the company's latest wage proposal.

The company had offered a staggered 7 per cent pay increase over four years, with 2 per cent in 2018 and further increases dependent on the airline's financial performance.

The French government owns 14.3% of the Air France-KLM parent group.

The stock dropped as much as 13 per cent, the most in nearly two years.

Air France reported Friday that it lost $320 million in the first quarter of 2018, adding that the strike will lead to at least $330 million more in lost revenue through the end of the year.

On Monday, the company's shares went into tailspin on the Paris stock exchange on Monday, falling by 13 percent after the French finance minister's statements, and following the resignation of the company's CEO on Friday.

"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.

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The airline said it anticipated operating 75 percent of medium-haul flights and 95 percent of long-haul services to and from Paris Charles de Gaulle airport, and 82 percent of short-haul flights.

"I call on everyone to be responsible: crew, ground staff, and pilots who are asking for unjustified pay hikes", Economy Minister Bruno Le Maire told the BFM news channel.

After a protracted financial slump, Air France-KLM profits climbed a year ago as it expanded its global alliances and launched a new budget airline. Strikes have already cost the company €300 million.

'Air France will disappear if it does not make the necessary efforts to be competitive, ' he warned.

The government of French president Emmanuel Macron is involved in its own ongoing battle with broad swaths of society which are resisting economic reforms.

Air France merged with Dutch carrier KLM in 2004.

The airline said: "Air France deplores the continuation of these strikes even though the period that opens does not allow to pursue any negotiation". The agreement, rejected by the trade unions, outlined a 7-percent salary raise between 2018-2021, with a 1-percent salary increase in 2018.

Other reports by MaliBehiribAe

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