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French Minister Warns: Air France Might ‘Disappear’

May 07, 2018
3 min read
French Minister Warns: Air France Might ‘Disappear’
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Air France-KLM's employee strikes raged into Monday after the latest round of failed negotiations wrapped up on Friday night and forced the resignation of the airline group's top executive.

Air France said 15% of its flights would be canceled Monday due to pilots and cabin crew striking over pay disputes. The workers are demanding a 5.1% pay increase in 2018 — down from their original demand of a 6% raise earlier this year.

Strikes began in early February and have continued in periodic spurts, wrenching the airline's European operations and frustrating travelers. The walkouts, expected to extend to Tuesday, will bring the total days of employee demonstrations to 15. The demonstrations have cost Air France-KLM at least 300 million euro (roughly $359 million) in lost revenue.

“If Air France does not become more competitive ... (it) will disappear,” French Finance Minister Bruno Le Maire told a news station in France on Sunday.

The latest failed discussions brought the ouster of the airline group's CEO Jean-Marc Janaillac. The top executive had offered the demonstrating employees a 7% wage increase over four years, starting with a 2% increase in 2018. That proposal was formally rejected by employees on Friday, with 55.44% of staffers voting against it in an online poll.

Amid the stalemate, Janaillac announced he would resign. He had previously said that he would leave his post at the helm of the airline group if the latest round of negotiations did not succeed. “I cannot see how I could stay at the head of the company,” he said at a press conference in late April.

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Due to the company's turmoil, shares of Air France-KLM dived to their lowest levels since April 2017, falling as much as 14.3% Monday morning. The company's shares are down almost 50% since the start of 2018, Reuters reports. The French government, which is the airline group's largest stockholder with 14% of shares, said it would not offer financial aid to the airline.

Janaillac is expected to formally submit his resignation to the Air France-KLM board in a meeting on May 9. The board said it would have a plan for new management ready by May 15.

Air France's increasingly dire situation is a good reminder of why you should always book with a credit card that offers you protection in case the airline you're booked to travel with goes belly up -- as Air Berlin did in 2017.

Featured image by AFP/Getty Images