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Air France-KLM Group warned that economic and political instability risks undoing the benefits of cheap fuel prices.
“Oil at the moment is good, but the volatility is enormous,” Chief Executive Officer Alexandre De Juniac said in an interview at an aviation conference in Amsterdam. “If things remain reasonable, we will have a good year. But it is a year of economic uncertainties” coupled with geopolitical risk.
Europe’s largest carrier has first-hand experience. The November terrorist attacks in Paris caused travel to the key hub to slump, costing the airline 50 million euros ($54 million) in November. Meanwhile, a long-standing dispute with workers took a violent turn in October. Reaching a labor agreement is critical for the company, which trails European competitors in profitability and market capitalization, making it more vulnerable.
De Juniac is negotiating with unions representing cabin and ground crews at the Air France brand and Dutch division KLM, as well as pilots at the French unit, after pulling a plan to expand its Transavia low-cost arm across Europe. The company has threatened to fire people and scale back the route network and fleet if an accord with Air France pilots on savings isn’t reached by early this year. The CEO stood by that plan.
“I feel that our people are fully aware of the situation of the company, which has to be improved,” De Juniac said. “They are fully ready to make improvements and to contribute to productivity gains. They know they are doing that for growth.”
–With assistance from Andrea Rothman.
This article was written by Richard Weiss from Bloomberg and was legally licensed through the NewsCred publisher network.