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New Air France KLM chief faces turbulent times

July 8, 2016 Headline News No Comments Email Email

egtmedia59Union-inspired agitation at Air France, resulting in a succession of strikes, is not going down well at KLM, according to reports from Europe.

A four-day strike that ended on 14 June 2016 forced Air France KLM to cancel 20% of its flights. The cost to the airline was estimated at about EUR 40 million (AUD 59 million) and any strike potentially harms bookings. The unrest is putting pressure on the relationship between the French and Dutch airlines, formed with a merger in 2004, according to a Bloomberg report.

Air France KLM is an unusual and highly successful union of two airlines. The national carriers of France and the Netherlands joined forces in 2004 to become one of the world’s top carriers in terms of revenue and international revenue passenger kilometres. Yet the airlines operate as two separate brands and there are no plans to merge.

Air France KLM tails

Air France KLM tails

Last year, a particularly wild protest at Air France headquarters culminated in an angry mob of union protestors storming the boardroom and ripping an Air France manager’s shirt off. The workers were angry at a plan to cut 2900 jobs and slash the airline’s network.

Jean-Marc Janaillac, Air France-KLM Group’s incoming chief executive, will have to deal with “an increasingly public schism between the carrier’s French and Dutch units”, Bloomberg says. Janaillac took over as director, chairman and chief executive of Air France KLM earlier this week, replacing Alexandre de Juniac.

KLM has higher productivity levels than Air France and some see KLM as largely propping up the group. Ministers in the Netherlands worry that Air France problems could affect KLM growth. Labour relations are pretty good at KLM, which was Europe’s fourth-largest airline before being bought by Air France.

Amsterdam Schiphol is an important European hub. The success of KLM is seen as essential to the continuing success of Schiphol and even of Amsterdam.

Meanwhile, IAG, owner of British Airways and Iberia and a big rival to Air France KLM, is surging ahead, having successfully slashed costs.

Written by Peter Needham

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