Air France briefs unions on cost-cutting revamp

Air France-KLM Group said it has begun briefing unions on a far-ranging revamp of short-haul operations aimed at reviving earnings at its main French arm. Details of the strategy, likely to cover mainline European flights away from the Paris Charles de Gaulle hub, as well as units operating smaller regional aircraft, were revealed to workers in meetings yesterday, Air France spokeswoman Brigitte Barrand said. Cost-cutting Europe's biggest airline said on April 2 it would extend a cost-cutting programme pioneered at bases in southern France to Paris Orly airport using Dutch discount unit Transavia. The Brit Air, CityJet and Regional divisions, which specialise in serving smaller cities, may also be standardised, it said at the time."We know that we need more synergies between regional units and Air France," CFDT union representative Michel Salomon said on Wednesday in a phone interview. "Rumours have been going on about the appointment of a single person to head this whole activity." Lionel Guerin, the founder and chief executive officer of turboprop operator Airlinair, an Air France ally, may be appointed to head the consolidated business, La Tribune reported, without saying where it got the information. Alexandre de Juniac, CEO of Air France-KLM's French unit, may reveal details of the new strategy, Barrand said, adding that French law dictates that the changes must be put to workers first. Air France will continue with short- and medium-haul routes as a whole, including services to Charles de Gaulle which feed more lucrative long-haul flights, only if employees agree to "drastic" cost reductions, it said last month. Headcount Measures related to a potential headcount reduction probably won't be presented, the CFDT's Salomon said, adding: "We know that at the very end of the process the jobs question will have to be addressed." Jean Cyril Spinetta, recalled as group CEO last year after a profit drop forced the exit of Pierre-Henri Gourgeon, said in January he's seeking a deal to deliver more than €2 billion (Dh9.28 billion) in annual savings he reckons are needed to secure the long-term future. An accord must be reached with unions by the end of June, the executive has said. Air France-KLM's operating loss widened to €597 million (Dh2.78 billion) in the first quarter and the company is headed for its fourth straight annual deficit, according to analyst estimates compiled by Bloomberg News. Deutsche Lufthansa AG, Europe's second-biggest airline, said on May 3 it will scrap about 3,500 administrative jobs, or 20 per cent of the total, in a €1.5 billion-euro savings push.