Air France Suspends Low-Cost Plan in Bid to End Strike

French flag carrier Air France on Monday offered to freeze the expansion of its low-cost operation in a bid to end the longest strike at the airline since 1998.

As the strike entered its second week, management said it would halt the development of its leisure subsidiary Transavia until December, unions said, raising hopes of an end to the crisis.

Air France chief executive Alexandre de Juniac said it was "the last offer" and was expected to sketch out a "global plan to exit the crisis" at around 1200 GMT.

He offered "to suspend the plan to create Transavia subsidiaries in Europe until the end of the year" in order to have "a deeper dialogue" with pilots, but insisted the overall project could not be called into question.

Union sources said there was a "softening" of tensions but complained that "the company still has a strong ambition to develop Transavia."

Air France pilots are on strike in protest at the airline's plans to develop Transavia France, which serves holiday destinations, primarily in the Mediterranean.

They fear the airline will attempt to replace expensive Air France pilots, who can earn up to 250,000 euros ($321,000) in annual salary, with Transavia pilots, who are paid considerably less.

As on previous days, the strike forced the airline to scrap more than half its flights on Monday.

Air France said the strike was costing them "up to 20 million euros ($26 million) per day" and said it would update its profit forecasts when the strike was over.

"The pilots' strike has lasted for seven days now with disastrous consequences for customers, employees and the company's finances," the airline said in a statement.

The airline operated around 40 percent of its flights on Monday, with nearly seven in 10 pilots walking off the job.

Air France has made concessions before -- notably an offer to limit the Transavia fleet to 30 planes compared with 37 originally planned -- but to no avail so far.

"This strike is becoming interminable," said Jean-Claude Delarue, president of a travelers' federation.

"You have to ask yourself whether Air France will end up losing market share because travelers will end up going elsewhere," said Delarue.

- Air France fate 'at stake' -

The government has called several times for an end to the strike, with Prime Minister Manuel Valls warning that the image of the eurozone's second largest economy was at risk.

Transport Minister Alain Vidalies warned over the weekend that "the fate of the company could be at stake."

"The low cost (arena) is not a choice, it's an obligatory move, that's reality. I think pilots are fully aware of this," he told French radio at the weekend.

The main pilots' union, SNPL, has called for the strike to be continued until Friday and threatened a further extension if its demands are not met.

Management has sent an email to its pilots to try to put an end to what it said were attempts of "intimidation" against pilots who were continuing to work.

"Air France management will not tolerate any misdemeanour and will initiate steps necessary to punish those who engage in such acts," read the email, obtained by Agence France Presse.

The company also wrote to its passengers to express its "frustration" and "unhappiness". It asked customers who have already booked a ticket before September 26 to delay their trip or change their flight free of charge.

In an apologetic message to its frequent flyers, the wider Air France-KLM group has said its aim was to offer "competitive" fares and Transavia was meant to complement Air France's operations without creating any "adverse impact on Air France staff".

Throughout the strike, the atmosphere at airports has been remarkably quiet, as the company has been warning travelers in advance that their flights are cancelled.