Air France Withdraws Plan to transfer Activities after Prolonged Strike by Pilots

Air France Withdraws Plan to transfer Activities after Prolonged Strike by Pilot

Air France-KLM has withdrawn a plan because of persisting strike by its pilots, said French Transport Minister Alain Vidalies on Wednesday.

Air France-KLM was feeling the pressure to drop the expansion plan because of the strike by the pilots. Pilots of Air France are unhappy over its plans to transfer activities to the low-cost unit, as they believe that the move will slash jobs and reduce their pay.

On Wednesday, the strike entered its 10th day, with Air France expecting to run only 46% of flights. According to airline, the strike is costing it up to 20 million euros a day.

"Let's not play with words. If the talks go nowhere there will be no solution except to say we are not getting anywhere, and at this stage we cannot go forward with this development outside France", said Air France chief executive Frederic Gagey.

Frederic Gagey said that for now, they have definitely withdrawn the idea of creating the offshoot and they have understood the need to re-explain the project to the pilots. Also, they have to talk about it with their social partners and identify right conditions to re-launch it.

The French government has 16% stake in parent group Air France-KLM. Prime Minister Manuel Valls worries that strike will harm France's image abroad. The Prime Minister has called for the end to strike.

The company's plan to enlarge Transavia in Europe is essential to fight competition from other low-cost players, said De Juniac. Pilots' unions have threatened to expand their walkout indefinitely until the management retracts the plan.

The pilots worry that the move mainly for those hubs that will hire pilots outside France in countries like Portugal will end up reducing their pay and perks. It could also lead to tougher working conditions. Shares in Air France-KLM were 0.6% stronger at 7.56 euros during early trade. The stock has declined by more than 10% since the strike started.

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