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French unions fret over new Canadian CEO for strike-hit Air France-KLM

© Thomas Samson, AFP | This file photo taken on October 9, 2015, shows the facade of Air France-KLM headquarters in Paris.

Text by FRANCE 24

Latest update : 2018-08-18

Several French unions have expressed dismay over the choice of former Air Canada executive Benjamin Smith to head Air France-KLM, citing the need for a CEO to defend “our national airline's interests” as well as fears he will seek to lower wages.

Air France-KLM named the 46-year-old Smith, formerly Air Canada’s chief operating officer, as its new CEO on Thursday, sparking an almost immediate backlash from unions. Smith is set to take up his new role by September 30.

Air France-KLM has been locked in a bitter dispute with unions over pay and working conditions since 2014. In autumn of 2015, the airline unveiled plans to slash 2,900 jobs as part of a restructuring programme, including some 1,700 ground staff, 900 cabin crew and 300 pilots, sources said at the time.

The stand-off quickly reached a fever pitch with the infamous shirt-ripping incident in October that year, when around 100 employees angry over job cuts stormed a meeting, causing Air France executives to flee. Two had their shirts torn to shreds and were forced to scale a fence to escape the mob, photos of which went viral.

>> Air France staff stage ‘violent’ protest at planned job cuts

Unions are seeking a 6 percent pay rise. Wages for crew and ground staff have been frozen since 2011. Employees rejected a management offer of a 1 percent pay rise this year.

Company estimates put the cost of the strike at €335 million for the first half of 2017. The airline has warned that the strikes are costing Air France €25 million each day, money the airline could be investing in buying planes and creating jobs.

The previous CEO, Jean-Marc Janaillac, resigned in May after workers maintained a pay strike for almost two weeks and rejected the company's wage proposals.

But Smith said in a statement he is "well aware” of the difficulties the airline group is up against.

"I am well aware of the competitive challenges the Air France-KLM Group is currently facing, and I am convinced that the airlines' teams have all the strengths to succeed in the global airline market," he said.

Union representatives will meet August 27 to discuss options for future strike actions.

First foreign CEO

Smith will be the first foreign CEO in Air France’s history, which has also sparked criticism from unions.

In a joint statement, nine unions objected to the appointment of a foreigner, citing the need for a CEO that will pursue "our national airline's interests".

"The choice of candidate should further the defence of our national airline's interests," the unions said. They also cited the current global climate of a US-led rise in protectionism among the reasons why the choice of a foreign CEO would be "inconceivable".

Vincent Salles, an official with the CGT-Air France union, told France Info radio on Friday that unions also fear Smith will oversee plans that would "deteriorate working conditions and wages".

Union fears were exacerbated by French media reports that Smith was seeking a remuneration package worth €4.25 million ($4.8 million), or three times that of his predecessor.

“It’s scandalous and sends a very bad message to company employees who have been striking these past months for a reevaluation of their salaries,” said Karine Monségu of the CGT-Air France union in comments to Le Parisien.

In a tweet on Friday, MP Alexis Corbière of the far-left la France Insoumise (France Unbowed) party also questioned the need for a CEO to earn three times more than his predecessor while employees have been fighting for years for a rise in pay.

'Why must he earn 3x more than his predecessor? And while refusing any pay rise for employees.'

Air France-KLM shares were down 4.7 percent in early afternoon trading Friday as news of the controversy spread.

Smith's prospective pay package is pretty standard within the aviation industry, however. According to travel industry magazine Skift, British Airways boss Willie Walsh took home $5.3 million in 2017 whereas Lufthanso CEO Carsten Spohr earned $4.9 million. 

President Emmanuel Macron’s government expressed support for the choice of chief executive after the public withdrawal of French candidate Philippe Capron, the finance chief of the Veolia Environnement utilities and transport company.

The French state holds a 14.3 percent stake in KLM-Air France. But alliance partners Delta Air Lines and China Eastern, which each hold 8.8 percent of Air France-KLM, argued for a seasoned international aviation executive to take over as CEO rather than another French former civil servant in the mould of Janaillac or his predecessors, according to sources close to the process.

Finance Minister Bruno Le Maire said the choice of Smith presented an "opportunity" and expressed hope that he would be able to "re-establish social dialogue" with the unions.

"We've always said we wanted a leader for Air France with a deep knowledge of aviation," Le Maire said during a visit to southwest France on Thursday.

Smith "meets all the conditions set by the state as shareholder", he added.

(FRANCE 24 with AP and AFP)

Date created : 2018-08-18

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