Air France - KLM CEO Resigns as More Strikes Loom

08 May, 2018, 00:53 | Author: Kevin Carter
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On Monday, the price of the shares of Air France dived as the CEO of the company did quit and the French Government warned the country's flagship carrier might collapse.

Jean-Marc Janaillac, who heads the Franco-Dutch airline group, said on Friday he would resign after losing a vote over pay that aimed to end a series of damaging strikes.

Air France-KLM reported a net loss of €269 million ($321 million) in the first quarter of the year.

The Finance Minister of France, Bruno Le Maire, said on Sunday that the government, which owns 14 percent of Air France, would not rescue the airline. Air France-KLM also forecast a "notably" lower income this year compared to 2017. There have been strikes at the SNCF rail organization too.

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.

Staff at Air France-KLM have been locked in a dispute over pay since February, with unions demanding 5.1 per cent increases this year, and are set to walk out for the 14th day today.

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British Airways and Lufthansa have already undergone heavy cost-cutting in recent years, amid rising competition from low-priced airlines and carriers from the Gulf states.

The rejection by the unions of a 2% wage increase for 2018 led to the call of a third strike this month and the company announced the cancellation 15% of flights this Monday.

But many analysts say Air France has lagged far behind in restructuring and has failed to address its continued losses. The industrial dispute come as separate strikes over Mr Macron's labour reforms are hitting France's national railways.

Bloomberg reports that the airline group's stock has dropped as much as 14 percent as of Monday, the biggest decline since 2002.

"The survival of Air France is in the balance", he said, adding that the state would not serve as a backstop for the airline's debts.

"I will not explain to the French that we will.absorb the losses of Air France while Air France does not make the necessary competitive efforts to be at the same level as its major European competitor".

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