» » Air France-KLM Gives In to Striking Pilots’ Union, Scaling Back Transavia Plan

Air France-KLM Gives In to Striking Pilots’ Union, Scaling Back Transavia Plan

Posted by Unknown on Thursday, September 25, 2014

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International Business |Air France-KLM Gives In to Striking Pilots’ Union, Scaling Back Transavia Plan



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PARIS — Air France-KLM has bowed to a key demand of its striking pilots’ union, raising prospects that an 11-day walkout that has grounded more than 6,000 flights and inconvenienced hundreds of thousands of travelers might end as early as Thursday.


Management said late Wednesday that it had canceled the proposed Europe-wide expansion of a low-cost subsidiary, Transavia, and called for striking pilots to return to work immediately. Instead, Air France-KLM said it would focus any expansion of Transavia on France.


The pilots’ strike was touched off by Air France-KLM’s announcement of a plan to invest 1 billion euros, or $1.28 billion, to make the no-frills Transavia unit better able to compete in Europe’s discount-travel market. Members of the French National Union of Airline Pilots said the broader Transavia expansion would move too many jobs out of France and drive down pilots’ pay.



The union, which represents about 71 percent of Air France pilots, did not immediately respond to Wednesday night’s offer to scale back the Transavia expansion. The proposal “is being studied currently” by union leaders, Agence France-Presse quoted Guillaume Schmid, a union spokesman, as saying on Thursday morning. “In the meantime, the strike continues for the moment,” Mr. Schmid said, according to the news agency, and “both sides want to reach a deal as soon as possible.”


Negotiations were set to continue on Thursday afternoon, Cédric Leurquin, an Air France spokesman, said. The airline's shares rallied 2.5 percent in Paris trading through midday, on hopes for a successful outcome.


Mr. Leurquin insisted that management had not caved in, noting that there had been no budging on plans to expand Transavia France. As such, there could still be tense negotiations if the pilots’ union holds out for a guarantee that Transavia France pilots will be hired on the same terms as Air France pilots.


The decision to cancel the broader Transavia Europe plan was “a gesture,” Mr. Leurquin added. “We said we wanted to remove a fear that existed” for the pilots.


The tone from the French government, which owns 16 percent of the airline, hardened in recent days as the strike dragged on, clouding the image of the country as a competitive place to do business and causing chaos in travel schedules. The strike is also costing Air France-KLM about €20 million a day, setting back the company’s effort to return to profitability.


“This strike must end now,” Stéphane Le Foll, a spokesman for the French government, told Radio Classique. “We’re stuck here on a project that, strategically, is important for the company. We have to find the ways and means for Air France to extend its activity in low-cost flights.”


In a statement on Wednesday, Alexandre de Juniac, Air France-KLM’s chairman and chief executive, and Frédéric Gagey, who holds the same roles at Air France, said: “Our Transavia project is a 100 percent pro-France project. It is about developing Transavia to encourage growth in France and quickly create more than 1,000 jobs in France (including 250 pilot jobs).”


Having withdrawn the Transavia Europe project, they added, “There is now no reason to strike because there are no longer any concerns about relocation. We therefore call on the striking pilots to return to work immediately.”


Whether management has merely blinked or substantially backed down, the new offer came after much confusion on Wednesday. Early in the day, the French transportation minister, Alain Vidalies, said that the Transavia Europe expansion had been shelved. Air France-KLM then issued a denial — before reversing course late in the evening and confirming that the broader expansion had in fact been canceled.


Manuel Valls, the French prime minister, helped to break the logjam on Wednesday, the newspaper Les Échos reported, quoting Mr. Valls as saying: “The creation of Transavia in France has to go forward. If Transavia Europe has to be put on hold or abandoned, that needs to be decided quickly, in the next few hours.”


Even if the strike were to end on Thursday, travelers could still be affected for days, as pilots, flight crews and planes are out of position around the world.



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