Air France plans to cut routes and shrink the fleet over the next two years to help it achieve profitability goals after failing to reach agreement with pilot unions to freeze pay and increase productivity.
Board members of parent company Air France-KLM Group were unanimous at a meeting in the Netherlands on Thursday in asking Air France-KLM and Air France to start preparing changes that would produce the desired savings, the airline said in a statement.
In the absence of a pilot deal, management will consider how deep cuts need to be to end annual losses that began in 2011. The airline will also need to weigh whether there might be job reductions other than attrition or early-retirement packages, the preferred means in recent years. Thursday’s statement gave no indication about what measures will be sought.
The board includes several people appointed by the French government as well as a representative of pilots.
For now talks with pilots have ended, an airline spokeswoman said. Air France’s own board will meet Friday and management will present their new plan to the central workers’ committee on Oct. 5, the airline said.
Transport Minister Alain Vidalies said Thursday that the government preferred to “protect jobs,” though earlier in the day Prime Minister Manuel Valls called for employees at Air France, “notably the pilots,” to assist in efforts to restore profit. The French state owns 15.88 percent of the holding company.
The latest savings campaign follows numerous earlier bids to make the carrier competitive. Frederic Gagey, who heads the Air France arm, has cited British Airways and Iberia as carriers that slashed capacity after workers blocked cuts, and both are now profitable and expanding.
The French unit would have been profitable last year without an extended pilot strike that cost the company 500 million euros ($558 million) in lost sales and bookings, and expects to make money in 2015.
This article was written by Andrea Rothmans and Elco Van Groningen from Bloomberg and was legally licensed through the NewsCred publisher network.