Air France CEO faces pressure to axe European low-cost project

Tue Sep 23, 2014 11:22am EDT
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By Gregory Blachier and Natalie Huet

PARIS/BERLIN (Reuters) - A strike over Air France-KLM's plans to launch its Transavia low-cost airline in Europe could prevent it from getting off the ground, chief executive Alexandre de Juniac said on Tuesday, while a government minister criticized the project.

The strike is costing the group up to 20 million euros ($25.7 million) daily and entered a ninth day despite a promise by de Juniac on Monday to postpone the project until the end of the year.

De Juniac said he was reluctant to abandon it altogether, saying it was crucial to fight competition from other low-cost players. But he added that he might have to if unions did not back down.

"We are suspending, and if we cannot reach an agreement we will be obliged, sick at heart, to abandon the project," he told France Inter radio.

De Juniac has said he is determined to press ahead with building Transavia in France with or without union backing. But on Monday he said he would suspend the European arm of the expansion until December, along with further talks with pilots' leaders. The unions, however, have stuck to their strike plan.

The French state has a 16 percent stake in Air France-KLM. Prime Minister Manuel Valls renewed calls for the end to a strike he fears will damage France's image abroad.

"There is no sense in the strike," Valls told Europe 1 Radio. "French people do not understand it."

But a statement from his Transport Minister Alain Vidalies was critical of the way talks had been handled.   Continued...

Chairman and CEO of Air France-KLM Alexandre de Juniac gestures during a news conference in Paris on the second week of a strike by Air France pilots September 22, 2014. REUTERS/John Schults