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Air France to cut 5,000 jobs

Thu Jun 21, 2012 1:10pm EDT

PARIS (Reuters) – Air France announced some-more than 5,000 pursuit waste underneath a cost-cutting devise on Thursday, formulating a domestic headache for new President Francois Hollande.

The cuts during a French dwindle carrier, partial of a loss-making Air France-KLM Group (AIRF.PA), come as a world’s airline attention grapples with singular expansion prospects, rising costs and fallout from a euro section debt crisis.

But Hollande’s Socialist government, in place given final month, has affianced to opposite rising stagnation by creation it prohibitively costly for companies to lay off workers.

To try to minimize a impact of a pursuit cuts on a workforce of 70,000, partially state-owned Air France betrothed to equivocate forced layoffs, enlivening early retirement, intentional departures, part-time operative and work-sharing.

But it pronounced forced redundancies would be destined if unions refused to support management’s plans. The pursuit waste will be finished by a finish of subsequent year.

“Air France is opposed a elemental choice about a future,” Air France Chief Executive Alexandre de Juniac pronounced in a matter as he met a airline’s works council.

“If we all make a required honestly distributed efforts, there will be no forced departures.”

This did small to encourage kinship leaders who fear Air France could use a hazard of wider layoffs to wring concessions from a workforce.

“Before we come to any agreement, we wish an declaration that there will be no mandatory redundancies until 2015, unless there is a vital event,” pronounced Beatrice Lestic, ubiquitous secretary of Air France’s CFDT union.


Shares in Air France-KLM, formerly down 13 percent this year after a thrust of over 70 percent final year, rose as most as 7.9 percent on news of a pursuit cuts. They sealed a day adult 5.5 percent higher, a biggest gainer on a extended French SBF120 index .SBF120.

Air France-KLM and Europe’s other comparison carriers have been opposed waste in short-haul operations as a continent’s economy has taken a battering.

The Franco-Dutch organisation denounced a three-year devise in Jan to revoke debt and handling costs by 2 billion euros ($2.5 billion) in an bid to mangle even in 2014.

Air France-KLM, that has a total 103,000 workers, says labor contracts stop it streamer off foe from low-cost carriers, including Britain’s easyJet (EZJ.L).

Meanwhile, airlines design any advantage from descending oil prices to be wiped out by Europe’s worsening mercantile prospects.

Air France-KLM’s German opposition Lufthansa (LHAG.DE) announced 3,500 executive pursuit cuts around a universe final month.

The Air France pursuit cuts are a blow to Hollande’s government, that is fighting stagnation of 10 percent – a top this century – and skeleton new manners to make it harder to glow workers.

The supervision and unions fear a call of layoffs from companies that did not wish to make them during a politically supportive choosing period.

Labour Minister Michel Sapin, who has pronounced a government’s aim is to “make layoffs so costly for companies that it’s not value it”, told Europe 1 radio on Thursday that he upheld negotiations between government and unions to save Air France.

“Management is observant that if zero is done, this good association risks collapsing,” Sapin said. “It’s not ‘if zero is finished a dividends will decline’, it’s not about profitability.”

(Editing by Lionel Laurent and Matthew Tostevin)

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