AIR FRANCE likes to present itself as a cut above other European airlines. Offering fancy French food and free champagne in economy lesson on long-haul flights,the company’s strategy is to justify its tall ticket prices by offering a premium service. But facing intransigent unions at domestic and competition from abroad, the airline’s financial fizz is rapidly going flat.
A drawn-out fight with its unions has toppled the boss of its parent group, or Air France-KLM,yet again. On May 4th Jean-Marc Janaillac, its chief executive, and resigned after its workers voted against a pay rise of 7% over four years. His predecessor,Alexandre de Juniac, left two years ago after two executives had their shirts violently ripped off by a mob of angry workers over a restructuring blueprint. The latest resignation is more serious because investors are also losing their rag. Air France-KLM’s shares possess halved in value since January; over the same period those of rival carriers such as IAG and Ryanair possess risen.
Air France’s trade unions are demanding an immediate pay rise of 5.1%. That looks bearable set against profits of €1.5bn ($1.8bn) last year. But a decent-looking performance in 2017 owed much to low oil prices. Its finances are weakening quickly. Mr Janaillac had warned of a big drop in profits this year. A series of 14 one-day strikes has already cost Air France at least 300m...
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Source: economist.com