Air France paralyzed by strikes

Another key sector in France has erupted into strikes, as Air France-KLM saw its stocks plummet. University students and French railway workers have been protesting throughout the spring, as new French President Emanuel Macron’s reform agenda is being met with resistance.

Air France-KLM Group stocks saw drastic drops amid a series of union strikes, a CEO’s resignation, currency fluctuations and surging jet fuel prices last week.

Wage negotiations between the airline and its unionised workforce have been ongoing since February, but have little to show for it. Employees are seeking wage increases of 5.1 percent in 2018, after having had their salaries frozen since 2011. To put further pressure on airline management, the union pushed through a series of strikes which have cost the company up to 300 million euros.

The last round of strikes, which began on April 7th, forced the company to cancel 15% of its flights. This forced CEO Jean-Marc Janaillac to resign on May 15th, after his “final offer” of a 7% wage increase, spread out over 4 years, was rebuked by the union.

The announcement and failure to find a solution to the ongoing union problems caused company shares on the Paris Stock Exchange to lose nearly 13% on Monday, after already having dropped nearly 50% since January. This, in turn, made the company plummet in valuation to the bottom of the Bloomberg World Airlines Index, consisting of 26 airline companies.

The Air France-KLM Group was created in 2004 as a result of a merger between Air France and KLM. The merger between the Dutch and French company made for the 5th largest airline in the world, serving 66 countries and with over 95,000 employees. It also made the company the 784th largest company in the world. However, while the company reported sales of $27.5 billion USD in 2017, only $876 million USD was profit. This stands in stark contrast with, for instance, Deutsche Lufthansa, which is one of the group’s chief competitors, and which had $35 billion in sales and a profit margin of $2 billion.

Bruno Le Maire, the French Finance Minister, now says that the future of the Dutch-French coalition is now at stake. “I urge everyone to take responsibility, crews, ground staff and pilots who request unjustified salary increases,” said Bruno Le Maire to the television channel BFM on Sunday.

[Title Photo: Le Parisien]

John Sjoholm, Lima Charlie News

John Sjoholm is Lima Charlie’s Middle East Bureau Chief and founder of the consulting organization Erudite Group. He is a seasoned Middle East connoisseur, with a past in the Swedish Army’s Special Forces branch and the Security Contracting industry. He studied religion and languages in Sana’a, Yemen, and Cairo, Egypt. He lived and operated extensively in the Middle East between 2005-2012 as part of regional stabilizing projects, and currently resides in Jordan. Follow John on Twitter @JohnSjoholmLC

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