Air France Climbs After Pilots Approve Restructuring
Struggling carrier Air France regained altitude Friday, with its stock rising well more than three percent after a key pilots' union endorsed a draft agreement that paves the way for a restructuring plan.
Shares in Franco-Dutch airline Air France-KLM closed with a gain of 3.72 percent at 4.40 euros on the Paris stock exchange, which was 0.23 percent higher overall.
The company got a lift from Thursday's decision by the powerful SNPL pilots' union to approve the draft agreement overhauling pay and working rules, a bid to boost the productivity of the company's French operations.
The vote will give management room to implement a broader restructuring plan dubbed Transform 2015, which aims to find savings of two billion euros ($2.5 billion) in the next three years and a 20-percent increase in productivity.
The company has been hit hard by surging fuel prices and competition from domestic budget carriers as well as from Middle Eastern airlines hungry to grow their market share on international routes.
Air France-KLM is also less competitive than its main European rivals Lufthansa and International Airlines Group, the company born of a merger between British Airways and Iberia.
The negotiations with pilots came after Air France in June said it needed to slash more than 5,000 jobs -- around 10 percent of its workforce -- through voluntary departures by 2014.
The pilots, most of whom are represented by the SNPL, were the last to discuss the new working agreements, which had already been ratified by ground staff but rejected by cabin crew.
More than two-thirds of pilots approved the new agreements, with a turnout of 83 percent.
The head of the union's Air France section, Jean-Louis Barber, said the deal meant pilots would have to work harder for the same or slightly higher salaries.
"But they got management's commitment there would be no layoffs," he said.
Pilots from a second union, SPAF, oppose the new agreements and went on strike for five days in July.
The airline has said it aims to voluntarily shed 1,681 cabin positions, 550 pilot jobs and 3,029 ground jobs.
To reduce the glut of pilots, some of them would go on a voluntary basis to work on a three-year contract for the carrier's subsidiary budget airline Transavia.
The parent company launched its cost-saving program after posting a loss of 809 million euros for 2011 and a 2012 first-quarter net loss of 368 million euros.