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

Alicia Farmer
May 7, 2018

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

On Friday Air France-KLM's chief executive quit over the crisis.

On Friday, Jean-Marc Janaillac, chief executive of parent company Air France-KLM, resigned after staff rejected a final pay offer from him, which would have raised wages by 7% over four years.

Air France-KLM shares are down nearly 50 percent since the start of 2018, versus a 3.7 percent gain on the broader Paris SBF-120.SBF120 index and a 4 percent fall on the pan-European STOXX 600 Travel & Leisure index.SXTP.

Rivals like British Airways and Lufthansa have already gone through painful restructurings to cope.

Strikes over the pay dispute, due to resume on May 7 and May 8, have cost the company 300 million euros (£265.5 million) so far. Close to 85 per cent of flights are likely to run on Monday, the carrier said.

Delta Airlines and China Eastern both hold 9 per cent of Air France-KLM.

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Staff and management at the carrier have been locked in a dispute over pay since February.

Some worker representatives hit back at Mr Le Maire on Sunday, after he called their demands unjustified. Monday's walk-out is the 14th day of action, as staff press for a 5.1% salary increase this year. "I think we can find a way out".

"There's reason enough to be anxious", CFDT leader Laurent Berger.

The Air France drama is posing yet another problem for President Emmanuel Macron's government as he marks one year in office.

Le Maire said French taxpayers won't bail the company out.

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

French unions have complained the company's management is not serious about negotiations.

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