Business World

Sunday 22 July 2018

Air France-KLM CEO to quit as staff 'push self-destruct button'

Strikes continue to take toll on the airline group and will wipe out €300m in profit, writes Ania Nussbaum

Air France-KLM CEO Jean-Marc Janaillac at a press conference to announce his resignation. Photo: Getty Images
Air France-KLM CEO Jean-Marc Janaillac at a press conference to announce his resignation. Photo: Getty Images

Ania Nussbaum

The Air France-KLM Group was thrown into disarray on Friday after CEO Jean-Marc Janaillac said he would resign following the rejection by workers of a wage offer aimed at ending a series of crippling strikes.

The airline boss "will convene meetings with the Air France-KLM and Air France boards of directors on 9 May and will submit his resignation," the company said in a statement.

About 55pc of staff who voted rejected the proposal in an online poll. The airline has faced 13 days of labour action by pilots, cabin crew and ground staff since February 22.

A "no" vote amounts to pressing "the self-destruction button", RBC analysts wrote in a note before the results were known.

While the outcome isn't legally binding, it will boost the negotiating position of unions at the French arm of Air France-KLM Group.

A majority of labour representatives have to approve any wage deal for it to take effect. Management offered a 7pc increase over four years, while unions were pushing for a 5.1pc rise this year.

Rotating two-day walkouts at Europe's biggest airline have taken their toll, with the carrier warning last week that full-year results are expected to be "notably below" 2017.

The strikes will wipe out at least €300m ($358m) in operating profit while the carrier's fuel bill will be €350m higher and the stronger euros will also have a negative impact. Shares dropped the most in six months.

"A bad proposal remains a bad proposal," Beltran Ybarra, a representative of the main pilots' union, said by phone before the end of voting.

Air France has a history of labour strife, with previous chief Alexandre de Juniac toppled amid strikes and violent clashes as workers sought to repel plans for a new low-cost operation based outside France.

Janaillac had avoided conflict by focusing efforts on the new Joon unit staffed by lower-paid cabin crew, before eventually having to confront pay issues at the main airline.

Bloomberg

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