Air France to shed over 5000 jobs by 2014

Air France said Thursday it is to slash over 5,000 jobs or around 10 percent of its workforce in voluntary departures by 2014 as part of a vast plan to make the struggling French airline profitable. A total of 5,122 jobs will be shed and the carrier said in a statement that all departures would be voluntary provided a new framework agreement can be signed with unions. "Air France has chosen to work in complete transparency and to privilege social dialogue to find structural and sustainable solutions, included in corporate agreements," it said. If new agreements are signed by staff then "Air France has pledged not to make redundancies and to implement various measures to support the necessary reduction in staff numbers," it said. The Franco-Dutch carrier Air France-KLM has launched a major cost-saving programme after posting a loss of 809 million euros ($1.0 billion) for 2011 and a first quarter net loss in 2012 of 368 million euros. Shares in Air France-KLM, in which the French state holds a 15 percent stake, shot up by over 7.0 percent after the job cuts announcement. The company said that the new framework agreement is "a major condition of the company's recovery" and the carrier needs to increase economic efficiency by 20 percent by the end of 2014. Air France said the Central Works Council would have draft agreements for signing by unions on June 28. "If the agreements are signed, the accompanying measures to reduce staff numbers will exclude the use of forced departures before the end of 2013," Air France said. The efficacy of the plan will be evaluated in the second half of 2013 and if the 20 percent improvement is achieved "the use of forced departures will also be avoided in 2014," the company said. If the agreements are not signed then the improved efficiency would be achieved "in a much more economically constrained context." "Given the impact of the necessary reductions in activity and routes closures, forced departures may therefore not be avoidable," Air France said. French Employment Minister Michel Sapin said ahead of Air France's announcement that "dialogue should allow the company to return to financial balance." "The management says that 'if nothing is done, this big company might collapse... We must maintain this big global French company that is Air France," Sapin said. Air France CEO Alexandre de Juniac said that "Air France is facing a fundamental choice about its future." "Our business plan has two ambitions: to ensure Air France returns to profitability and to better serve our customers. If we all make the necessary equitably distributed efforts, there will be no forced departures," he said. But unions said they were seeking job guarantees in exchange. "This does not satisfy us. We want a formal undertaking on the entire plan," or guaranteeing jobs up to 2015, said Michel Salomon of the CFDT union.