Confusion Swirls over Air France Budget Plans as Strike Deepens

Confusion reigned Wednesday over Air France's plan for its budget subsidiary that has been at the heart of a bitter and costly strike, as the government and management contradicted each other.

Transport secretary Alain Vidalies told French radio that the airline had scrapped plans to expand its Transavia subsidiary, but Air France management denied that within minutes.

"The Transavia Europe (budget airline) project has been abandoned by management," Vidalies told RMC radio.

But a spokesman told Agence France Presse it was "premature" to say it had scrapped the plans to develop its budget subsidiary, which it sees as vital to survive in the cut-throat world of low-cost aviation.

"There is no change in the negotiations to suggest that this project has been withdrawn," a spokesman told AFP.

"The proposal on the table remains to freeze this project and to begin a wide dialogue with social partners between now and the end of the year, as management announced on Monday," added the spokesman.

In what it described as a "last" offer to break the deadlock, as the strike stretched into a second week, management offered to put the project on hold until December. But unions dismissed this as a "smoke screen."

The 10-day strike is already the longest at the airline since 1998 and is costing up to 20 million euros ($26 million) daily, management estimates, as it is forced to scrap roughly half of its flights every day.

Unions have threatened to extend the action until Friday if their demands are not met and pilots marched through Paris in uniform on Tuesday, wearing "Made in France" striped sailor tops on their shoulders.

The pilots are striking in protest at the airline's plans to develop Transavia, which serves holiday destinations across Europe and the Mediterranean.

They fear the airline will seek to replace expensive Air France pilots, who can earn up to 250,000 euros a year, with Transavia pilots, who are paid considerably less.

The government has called several times for the strike to be halted, with Prime Minister Manuel Valls saying the image of France was at stake.

Vidalies on Wednesday repeated his call for pilots to return to work, saying "there is no longer any reason for the strike to continue".