Air France strike hits European travel

Mon Sep 15, 2014 3:40pm EDT
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By Natalie Huet, Kirsti Knolle and Tim Hepher

(Reuters) - European travellers face continued disruption as Air France (AIRF.PA: Quote) pilots began a week-long strike in a dispute over cost cuts, but a pilots union at the last minute called off a strike planned for Tuesday at Germany's Lufthansa (LHAG.DE: Quote).

Air France said it had been forced to cancel six out of 10 flights on Monday and predicted the same level of groundings the next day.

Air France pilots intend to strike until Friday over the carrier's plans to expand the low-cost operations of its Transavia brand by setting up foreign bases. Their union said they stood ready to prolong the strike as both sides accused the other of causing an impasse in weekend negotiations.

An extended strike could become the airline's most serious dispute since a 10-day stoppage that disrupted France's hosting of the World Cup soccer tournament in 1998, union leaders said.

Shares in Franco-Dutch parent Air France-KLM (AIRF.PA: Quote) fell more than 3 percent, reversing gains seen last week when the group outlined a new strategic plan focusing on an expansion of low-cost activities across Europe.

In Germany, pilot union Vereinigung Cockpit late on Monday said it had cancelled an eight-hour strike planned for Tuesday at Germany's biggest airline Lufthansa, which would have been the fourth strike to hit the airline within three weeks.

New competition from low-cost rivals and fast-growing long-haul carriers in the Gulf has prompted European carriers to speed up restructuring measures and tweak their business models.

Alitalia is set to undergo restructuring and loss-making Finnair (FIA1S.HE: Quote) said last month it is taking rapid steps to cut its costs. But Lufthansa and Air France-KLM, which have both issued profit warnings in recent months, have a history of stormy relations with their powerful unions.   Continued...

An Air France Airbus A330 aircraft takes off at Charles-de-Gaulle airport, near Paris, September 14, 2014.   REUTERS/Christian Hartmann