Air France to cut jobs as seeks recovery

Thu Jun 21, 2012 7:49am EDT
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PARIS (Reuters) - French carrier Air France unveiled plans to cut more than 5,000 jobs by the end of next year as part of an effort to slash costs and debt to return to growth in the face of tough market conditions in Europe and political pressure at home.

The job cuts come as the world's airline industry grapples with the need to consolidate because of limited growth prospects, rising costs and the effects of the euro zone debt crisis.

Air France, under the watchful eye of France's new Socialist government, pledged to try to avoid forced layoffs by encouraging early retirement, voluntary departures, part-time working and work-sharing.

But the carrier warned forced redundancies would be "unavoidable" if unions refused to support management's plans.

"Air France is facing a fundamental choice about its future," Air France Chief Executive Alexandre de Juniac said in a statement on Thursday, when he was meeting with the airline's works council. "If we all make the necessary equitably distributed efforts, there will be no forced departures."

Air France-KLM (AIRF.PA: Quote) and Europe's other leading legacy carriers have been confronting losses in their short-haul operations as Europe's economy has taken a battering, leading to a wave of painful contract negotiations.

The Franco-Dutch group unveiled a three-year plan in January, fleshed out last month, to reduce debt and operating costs by 2 billion euros ($2.54 billion) in an effort to return to break-even in 2014.

It has said its labor contracts stand in the way of heading off growing competition from low-cost carriers including Britain's easyJet (EZJ.L: Quote) and a historic fuel bill which is set to rise by 1 billion euros in 2012.

Global airline leaders meeting in Beijing earlier this month stuck to their overall profit forecast for 2012, but the industry is braced for Europe's debt crisis to worsen and wipe out the benefit of recently cheaper oil.   Continued...

Passengers check-in at Air France desk in Nice International airport February 7, 2012 as the main pilots' union and Air France's top unions called for a four-day strike across the aviation sector to protest against a draft bill aimed at ensuring a minimum service for air travellers during industrial action. REUTERS/Eric Gaillard