It’s a dispute that has so far cost Air France over €300 million, as well as the head of its Chief Executive, Jean-Marc Janaillac – who was forced to step down from his post on Friday evening. Janaillac said his position had become untenable after 55% of workers rejected a pay deal that was aimed at breaking a deadlock between the company and the airline’s unions.
Unfortunately for Janaillac, his gamble didn’t pay off and now Air France has not only got to deal with a shattered negotiating strategy but also a leadership vacuum. The airline had offered a 2% pay raise for all employees this year, with a further 5% to be paid incrementally between 2019 to 2021.
But a coalition of unions have been demanding an immediate 5% pay raise as their final offer in bringing the dispute to an end. As Philippe Evain, president of the SNPL pilots union explained on Friday:
“We were asking 5 percent this year, the company was proposing 2 percent. There is probably an answer to be found somewhere in between.”
Yet, Janaillac warned of an “enormous mess that will only put a smile on the faces of our competitors,” during a press conference convened to announce his departure. Many other European airlines have already gone through periods of significant pain in order to renegotiate employee terms and conditions.
Carriers such as Lufthansa, British Airways and even Air France’s sister company, KLM have restructured their businesses in order to compete with the onslaught of both low-cost competition and well-funded rivals from the Middle East. The pace of modernisation at Air France, meanwhile, has been much slower.
Even France’s Finance Minister, Bruno Le Maire waded into the dispute on Sunday, warning the airline could “disappear” if it did not make a concerted effort to become more competitive.
The French government owns a 14% stake in the airline but Le Maire said no one should be of the illusion that Air France could rely on that investment to keep it going:
“We’re minority shareholders … those that think that whatever happens the state will come to Air France’s rescue and soak up Air France’s losses are mistaken.”
Since the beginning of the year, shares in the Air France-KLM group have shrunk some 39%.
But as workers stage yet another strike today, unions are calling on management to once again return to the negotiating table In a joint press statement, the unions argue their demands can be easily met without endangering the future of Air France. It’s unclear whether unions may be willing to lower their demands.
And while the coalition is putting on a united front at the moment, some unions want to adopt a more conciliatory tone. Further announcements from Air France are expected soon.
