Abu Dhabi, UAEWednesday 17 July 2019

Air France to cut hundreds of jobs amid rising competition

Budget rivals and trains spur biggest division of Air France-KLM Group to eliminate the positions on French domestic routes

An Air France plane in Bouguenais near Nantes, France. The carrier is to eliminate positions. Reuters
An Air France plane in Bouguenais near Nantes, France. The carrier is to eliminate positions. Reuters

Air France plans to cut as many as 465 jobs as it slashes short-haul capacity in a bid to stem losses amid competition from low-cost airlines and high-speed trains.

The biggest division of Air France-KLM Group will eliminate the positions on French domestic routes over the coming year, it said on Monday. Consultation with unions and other stakeholders will commence soon and there will be “no forced departures”, Reuters reported the carrier as saying.

Capacity cuts will amount to 15 per cent of the short-haul network by the end of 2021, according to the company. Other full-service airlines are also being hurt by falling fares, although British Airways owner IAG eked out a profit in the first quarter.

It posted an operating profit of €135 million (Dh558.1m) on Friday, while reiterating its full-year guidance and predicting that pricing will pick up in coming months, according to Bloomberg.

The earnings figure was still 60 per cent down from a year earlier as higher fuel costs and the timing of Easter further eroded margins. Deutsche Lufthansa reported a €336m loss and Air France-KLM suffered a €303m shortfall.

“Most European airlines have been reporting losses in the quarter. That’s what sets us apart,” IAG chief executive Willie Walsh said on Friday. He suggested that the “capacity issue” is set to ease and stood by a forecast for annual earnings in line with last year’s €3.48 billion.

But for Air France, competition from TGV express trains is imposing extra pressure on the airline, which has racked up domestic losses of €717m since 2013.

Group chief executive Ben Smith has so far kept powerful French unions onside, ending a series of crippling strikes with new labor deals after taking over last year.

In addition to the train, Air France’s Hop! domestic arm has been battling discount carriers led by easyJet and Ryanair, and in the longer term it’s unclear if the unit will carry on as now or whether the group’s own low-cost Transavia division will take over a chunk of services.

Jerome Beaurain, a representative of the Sud Aerien union, said before the job cuts were confirmed that Air France has been undermining its domestic business for years and that it’s already “insufficiently staffed”.

Updated: May 13, 2019 04:52 PM

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