Air France Pilots strike

Air France-KLM Buckles in Pilots’ Strike

Air France Pilots strike

Air France Pilots strike

A week of crippled flights due to a pilots’ strike has persuaded Air France-KLM to soften its plans to migrate its short-haul flights to a low-cost unit. The airline said today that it would slow the planned expansion of Transavia, a KLM discount carrier, until the end of the year to allow for more time to reach an agreement with Air France-KLM pilots. Pilots quickly rejected the offer, calling it a “smoke screen that does not offer more guarantees than the previous announcements, and does not solve any problem.” The pilots contend that Transavia should operate with the same salaries and benefits, and they have not shortened their strike, which is in effect through Sept. 26.

The strikes began on Sept. 15 and have cost Air France-KLM as much as $180 million, based on its estimate of up to €20 million ($25.7 million) per day. Only about 40 percent of Air France-KLM pilots are flying during the work action.

Air France-KLM is seeking to curb costs for its short, intra-European flights as it faces increasing pressure from low-cost airlines like Ryanair and EasyJet. Those airlines, and others, have both cost and fare structures radically different from the large, formerly state-owned carriers such as Air France, Lufthansa, and Alitalia, which generate most of their profits from their long-haul flights and premium cabins.

Air France-KLM’s plan mirrors a similar strategy at Lufthansa, which has moved most of its short intra-European flights to its lower-cost Germanwings airline. In 2012, Austrian Airlines—which is also owned by Lufthansa—transferred 2,000 pilots and flight attendants to its Tyrolean Airways unit. Earlier this month, the European Court of Justice ruled that the transfer did not nullify the higher-wage labor contracts the workers had agreed to at Austrian—a verdict that further complicates Lufthansa’s effort to reduce employee expenses.

Transavia France has about 14 jets now and Air France-KLM wants to migrate its domestic flying to the unit and away from Air France-KLM, where costs are 27 percent higher. Under the airline’s Perform 2020 plan unveiled this month, Amsterdam-based Transavia would grow to 100 airplanes by 2017, from 41, and carry more than 20 million passengers per year while generating about €100 million in earnings.

More… http://www.businessweek.com/articles/2014-09-22/air-france-klm-buckles-in-pilots-strike

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