Air France said it’s prepared to delay the growth of low-cost unit Transavia in a move aimed at ending the company’s most disruptive strike since 1998, staged by pilots who view the plan as a threat to their status.
Expansion of Transavia outside France and the Netherlands will be put on hold until the end of the year to allow further talks with unions, Air France-KLM Group Chief Executive Officer Alexandre de Juniac said today in a statement.
About 60 percent of Air France pilots have been off the job since last Monday, with crews voting on Sept. 20 to extend the walkouts into this week. Pilots are concerned that growth at Transavia could lead to a transfer of routes from Air France itself, mirroring a process at rival Deutsche Lufthansa AG, which is shifting flights to its Germanwings discount unit.
In light of employee concerns, Air France now proposes “postponing the plan to create Transavia subsidiaries in Europe outside France and the Netherlands, while entering into extended talks about the project and building together the necessary guarantees by the end of the year,” it said today.
De Juniac, CEO for the past year, had previously said that with the cost base at Transavia France itself still not low enough a new, more competitive, arm might need be established elsewhere in order to end short-haul losses and fend off the challenge of discount carriers such as EasyJet Plc.
In return for the suspension of that plan pilots must agree to accelerate growth of Transavia France, the company said. The SNPL union’s insistence that Air France pilots employed on Air France contracts should be used at the unit “would inevitably lead Transavia France to failure,” it said.
France’s prime minister and economy minister have thrown their weight behind the airline.
Still, pilot strikes over strategic changes have claimed the scalps of previous chiefs. Bernard Attali was fired by the government — Air France’s owner at the time — after eight days of strikes in 1993, while Christian Blanc, CEO from 1993 to 1997, quit after the state refused to sell a majority stake.
Air France will hold a press conference with management at 2 p.m. in Paris, the company said.
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