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PARIS (Reuters) - Air France sought to bring a costly 12-day pilots strike, over the expansion of its budget Transavia unit, to an end on Friday with a series of proposals that won the backing of the company's board and French Prime Minister Manuel Valls.
Parent group Air France-KLM (AIRF.PA) earlier sought to rescue what remains of the low-cost expansion plan and shore up its chief executive's authority after a project to set up Transavia Europe hubs outside France employing staff on local conditions was dropped.
Air France told pilots it would lift a limit on the size of the Transavia France fleet, stick to Boeing (BA.N) 737 aircraft, introduce co-existing contracts for Air France pilots who volunteer to fly for the budget unit, and have a single seniority list.
"Air France believes that this balanced solution to develop Transavia France should be enough to end this strike, which is extremely costly and damaging to the company, its customers and its staff," Air France said in a statement.
Pilots and management resumed negotiations on Friday, but the Air France arm of the SNPL union said management's latest offers did not address pilots' concerns, and demanded that an independent mediator be appointed to help solve the dispute.
It said in a statement in the evening that it stood ready to lift the strike as soon as such a mediator was appointed.
The board of Air France-KLM said earlier that a union demand that pilots hired by Transavia should receive full Air France pilot pay and conditions "totally opposes the principles of this model".
"The board has confirmed that the company can only develop under economic conditions that are compatible with the low-cost model," Air France-KLM said in a statement that noted management had the board's "full support".
Air France-KLM Chief Executive Alexandre de Juniac is under severe pressure to bring an end to the strike, which has grounded over half of Air France's flights and is costing up to 20 million euros ($25.5 million) a day.
French Prime Minister Valls put pressure on the pilots on Friday, calling for them to accept the deal put forward by the airline to end the conflict.
"This strike must end," Valls said. "This strike is intolerable for customers, this strike is intolerable for the company, Air France, this strike is intolerable for the country's economy."
The government is a 16 percent shareholder in the group and sits on the board.
Juniac ceded ground this week, first postponing plans to have Transavia hubs outside France, then, under public pressure from the government, abandoning those plans completely. Pilots are still holding out for a single contract.
Air France expects to operate more than half of its flights on Saturday, given an estimated 57 percent of pilots planning to strike. This compares with 48 percent of services running on Friday.
Shares in Air France-KLM slid 1.7 percent on Friday and are down more than 12 percent since the strike began on Sept. 15.
(1 US dollar = 0.7846 euro)
Reporting by Andrew Callus, Gregory Blachier, Julien Ponthus and James Regan; Editing by Mark John and William Hardy