Air France to shed over 5000 jobs by 2014

Air France announced on Thursday that it hopes to shed 5,122 jobs in voluntary redundancies by 2014 as part of a vast plan to make the struggling French airline profitable.

Reuters/Eric Gaillard

If new agreements are signed by staff then "Air France has pledged not to make redundancies and to implement various measures to support the necessary reduction in staff numbers," a communiqué said.

The Franco-Dutch carrier Air France-KLM has launched a major cost-saving programme after posting a loss of 809 million euros for 2011 and a first quarter net loss in 2012 of 368 million euros.

Shares in Air France-KLM, in which the French state holds a 15 percent stake, shot up by over 7.0 percent after the announcement, which would mean a reduction of its workforce by about 10 per cent.

The company said that the new framework agreement is "a major condition of the company's recovery" and the carrier needs to increase economic efficiency by 20 percent by the end of 2014.

Air France said that draft agreements should be ready for signing by unions on June 28.

The efficacy of the plan will be evaluated in the second half of 2013 and if the 20 percent improvement is achieved "the use of forced departures will also be avoided in 2014," the company said.

If the agreements are not signed then the improved efficiency would be achieved "in a much more economically constrained context."

French Employment Minister Michel Sapin said ahead of Air France's announcement that "dialogue should allow the company to return to financial balance."

"The management says that 'if nothing is done, this big company might collapse... We must maintain this big global French company that is Air France," Sapin said.

Air France CEO Alexandre de Juniac said that "Air France is facing a fundamental choice about its future."

"Our business plan has two ambitions: to ensure Air France returns to profitability and to better serve our customers. If we all make the necessary equitably distributed efforts, there will be no forced departures," he said.

But unions said they were seeking job guarantees in exchange.

"This does not satisfy us. We want a formal undertaking on the entire
plan," or guaranteeing jobs up to 2015, said Michel Salomon of the CFDT union.