Published: Tue, May 08, 2018
Markets | By Erika Turner

Air France Shares Drop Sharply As Strikes Continue

Air France Shares Drop Sharply As Strikes Continue

"Air France-KLM is now without a boss and will find it hugely hard to attract a high-level manager", analysts at French brokerage Aurel-BGC said.

Air France-KLM shares are down nearly 50 per cent since the start of 2018, versus a 3.7 per cent gain on the broader Paris SBF-120 index and a 4 per cent fall on the pan-European STOXX 600 Travel & Leisure index.

"Following the results of the staff consultation launched on 20 April 2018, Jean-Marc Janaillac, Chairman and CEO of Air France-KLM, has confirmed his decision to resign", an Air France statement read, Friday.

Bloomberg reports that the airline group's stock has dropped as much as 14 percent as of Monday, the biggest decline since 2002. However, by afternoon, the shares of Air France were down by 9.7 percent at price of 7.31 Euros.

French Finance Minister Bruno Le Maire had urged the airline and its workers to resume talks on Sunday, saying that if Air France did not become more competitive it "will disappear". Employees have been staging walkouts since February and voted against a salary offer from the company.

In its latest update Air France said that on May 8 it expects to operate 80 percent of its flight schedule, including 95 percent of its long-haul flights, 75 percent of its medium-haul flights to and from Paris - Charles de Gaulle, and 82 percent of its short-haul flights to and from Paris - Orly and the French provinces.

In a TV interview with BFMTV, Le Mair said the workers' demands were unjustified and warned that the state was not willing to step in and pay the company's debt.

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A wave of strikes at Air France has so far cost the company 300 million euros.

Italy's Alitalia last May filed to be put under special administration for the second time in less than a decade, starting a process that will lead to the loss-making airline being overhauled, sold off or wound up.

However, the French government assured that it will not be responsible for the company's losses.

The company had offered a staggered 7 per cent pay increase over four years, with 2 per cent in 2018 and further increases dependent on the airline's financial performance.

The unions have demanded 5.1 per cent this year.

After negotiations reached deadlock, Janaillac called a vote last Friday, the results of which went against him.

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