Published: Tue, May 08, 2018
Business | By Pearl Harrison

Air France shares tumble following resignation of CEO and ongoing strike action

Air France shares tumble following resignation of CEO and ongoing strike action

On Monday, the price of the shares of Air France dived as the CEO of the company did quit and the French Government warned the country's flagship carrier might collapse.

Mr Janaillac is not the first Air France executive to suffer at the hands of its unions.

French Finance Minister Bruno Le Maire had urged the airline and its workers to resume talks on Sunday, saying that if Air France did not become more competitive it "will disappear".

Air France-KLM shares fell more than 14 percent before recovering some losses to trade down 10 percent at 7.28 euros ($8.68) at 1230 GMT, their lowest level since April 2017.

The share prices were followed by the resignation of the CEO of Air France- KLM, Marc Janaillac, after the workers rejected the latest wage proposal. There have been strikes at the SNCF rail organization too.

The company had offered a staggered 7 per cent pay increase over four years, with 2 per cent in 2018 and further increases dependent on the airline's financial performance.

British Airways and Lufthansa have already undergone heavy cost-cutting in recent years, amid rising competition from low-priced airlines and carriers from the Gulf states.

In a statement on its website, Air France said scheduled flights will be disrupted per "due to the confirmation of the strike of several Air France staff unions for Monday and Tuesday".

The strikes had already cost the airline about €300m and pushed its first-quarter results to a €118m loss despite KLM making a €60m profit.

The government's response is seen as a test of labour reforms launched by French President Emmanuel Macron.

Mr Le Maire told French news channel BFM TV: "I call on everyone to be responsible: crew, ground staff, and pilots who are asking for unjustified pay hikes".

Janaillac will formally resign at a Board of Directors' meeting on May 9, the company said, adding that "it will be their responsibility to take the appropriate measures to ensure the continuity of the group and Air France during the transition period".

Air France staff are striking on May 7and 8 as a stale-mate over pay continues.

The government over the weekend said the French state, the largest shareholder with a 14 per cent stake, would not ride to the airline's rescue.

Like this: