6 October 2015

Air France and the road to toplessness


Air France is, to put it bluntly, in trouble. Their market share of domestic, short and medium haul flights is being chipped away by rising and ever expanding low-cost carriers, all while the relatively new airlines based in the Gulf and other developing countries are offering better bargains on long haul flights. That being said, the airline is not the only one that finds itself in this potentially precarious position. Its rivals British Airways and Lufthansa operate under similar constrains, and are indeed thriving. In 2014, BA registered a profit of €1.3 billion and Lufthansa €553 million, versus Air France’s €376 million loss.

By now you’ve probably all seen dramatic images of Air France Executives, topless yet still sporting ties, clambering over fences to escape from mobs of angry employees, whose alleged battle cry as they stormed the Air France headquarters was “A poil, A poil” and “démission” (“strip, strip” and “resignation”).

This unfortunate scene took place on the morning of Monday the 5th of October. Following a breakdown of negotiations on the structural reforms that Air France needs if it going to survive, the management was holding a meeting to announce the provisions of its plan B when demonstrators interrupted the meeting and attacked members of the senior management, namely Xavier Broseta (head of HR) and Pierre Plissonnie(director of long-haul flights, pictured above) – though it is worth mentioning here that both Air France and the relevant trade unions were all quick to clarify that these actions were the work of a small group of individuals and not representative of the wider protest movement. The plan B in question involves a personnel reduction of 2900 (300 pilots, 900 hostesses and stewards and 1700 ground personnel), a 10% reduction in long haul flights, and shrinking the fleet size.

This plan B came about following the airline pilots’ union refusal to accept a 17% increase in productivity that would have been achieved by marginally increasing flight time while keeping wages constant. What is worth noting here is that Air France pilots work 78% of what BA pilots do, for more than double pay.

Who then is to blame? It goes without saying the pilots and the pilot union have been on the receiving end of much ire, especially from the ground and cabin personnel who feel they have already made a number of concessions towards restructuring the company. Not to be forgotten however, is the role that the French state has played in this debacle. With 17% ownership, successive French governments, regardless of their political stripes have been accused of pursuing policies that avoid strikes above all else, at the expense of reforms which have been delayed for far longer than is tenable.

In the meantime, it could have been worse, those managers could have ended up barricaded in an office for 24 hours

Theo Varenne is a CapX contributor.