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

Bruno Le Maire's warning that Air France could "disappear" comes as staff begin another round of industrial action over a pay dispute.

On Friday, Air France-KLM CEO Jean-Marc Janaillac handed in his resignation to the executive board after the staff rejected a final pay offer from him.

The French government owns 14.3% of the Air France-KLM parent group. He promised a 7% wage increase over four years, but included scope to adjust that level if Air France's annual financial result was less than €200 million and to apply a reversion clause in case of higher inflation or a negative financial result.

Air France reported Friday that it lost $320 million in the first quarter of 2018, adding that the strike will lead to at least $330 million more in lost revenue through the end of the year.

Air France has said that "nearly 85 percent" of its flights would be operating, including 99 percent of long-haul flights, 80 percent of its medium-haul flights to and from Charles de Gaulle and 87 percent of short-haul flights to Orly airport and elsewhere in France.

The announcement of Janaillac's departure came as Air France-KLM released its first-quarter earnings, which showed a net loss of 269 million euros ($322 million), weighed down by three days of strikes which cost about 25 million euros per day according to the company.

It has been forced to ground 15 percent of its flights on Monday and 20 per cent on Tuesday. As a result, group's chief executive (CEO) Jean-Marc Janaillac resigned, raising questions over the airline's capacity to cut costs and reform.

The airline announced Monday that almost 85 percent of its flights would operate, including 99 percent of its long-haul flights.

The Air France turmoil has coincided with other strike action in France where rail workers press on with rolling stoppages to protest President Emmanuel Macron's planned overhaul of SNCF, the state-run train operator.

"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.

Air France merged with Dutch carrier KLM in 2004.

Unions want a 5.1% pay rise this year, arguing that their wages have been frozen since 2011 amid restructuring and noting that the company's profits are up.

  • Kyle Peterson