Air France-KLM boss resigns after striking staff reject pay deal

PARIS: Air France-KLM boss Jean-Marc Janaillac announced his resignation Friday after staff at the carrier's French operations rejected a pay deal aimed at ending months of walkouts.

"I accept the consequences of this vote and will tender my resignation to the boards of Air France and Air France-KLM in coming days," said Janaillac after 55.44 percent of Air France workers voted against accepting a pay rise of seven percent over four years.

Unions said the increase was too little after six years of pay freezes and demanded a 5.1 percent raise this year instead.

Staff and management at the carrier have been locked in a dispute over pay since February.

Friday's vote came as workers embarked on a 13th day of intermittent strikes, prompting the cancellation of a quarter of flights on average.

Janaillac, who had been in the post for under two years and staked his future at the company on staff accepting the deal, deplored their decision as a "huge waste".

"Air France was on the road to success. I regret that that dynamic was not understood (by staff)," the 65-year-old said.

In a statement the company said he would officially resign on May 9.

The announcement of his departure came as Air France-KLM released its first-quarter earnings, which showed a net loss of 269 million euros ($322 million), weighed down by three days of strikes which cost about 25 million euros per day according to the company.

The group warned the dispute would shave at least 300 million euros off its operating profit for the full year, pulling the earnings "notably below" last year's 1.9 billion euros.

Janaillac had been gambling on the strikers' resolve wavering, with just 21.5 percent of pilots participating in Friday's walkout, compared with 33 percent when the stoppages began in February.

The French government, which owns a minority stake in the group, is watching the situation closely given the general atmosphere of discontent roiling the country, with rail workers, public servants and students also protesting a wide-ranging reform drive.

Ahead of the vote, French Prime Minister Edouard Philippe had urged both sides "to assume their responsibilities".

If employees reject the latest offer, "I would urge everyone to fasten their seat belts because in my opinion, the turbulence won't be light," Philippe told Europe 1 radio last week.

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Unions were divided on the outcome of the vote, which had an 80.33 percent participation rate.

"It gives us added legitimacy, contrary to what management wanted," said Christophe Campestre, spokesman for the pilots' union Spaf, one of those arguing that pilots, cabin and ground crew deserve "their share of the pie" after six years of belt-tightening.

But the moderate CFDT union, which is not taking part in the strikes, warned that Janaillac's departure "augurs a troubled period for our company and a serious management crisis, which Air France cannot afford, given the economic and competitive environment in which it is operating.

Management had warned that Air France's finances were fragile and that competition from carriers in the Gulf as well as low-cost operators in Europe remained stiff.

Air France's operating margin of 555 million euros in 2017 still lags behind that of the 910 million euros at KLM, and "still far behind those of many other rivals", it noted.

Janaillac was named chief executive in 2016 with a mandate to defuse tensions after years of strikes and labour disputes -- including a notorious 2015 incident when two executives had their shirts torn off while escaping workers protesting plans to cut nearly 3,000 jobs.

The company launched its own low-cost airline, Joon, in 2017, shortly after Janaillac unveiled his restructuring plan, ambitiously titled "Trust Together".