France pilots' strike halts flights and hits shares
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[September 15, 2014]
By Natalie Huet and Kirsti Knolle
PARIS/FRANKFURT (Reuters) -
Pilots at Franco-Dutch airline Air France-KLM began a
one-week strike at the French arm of the business over
plans to cut costs, halting more than half of its
flights on Monday and sending the group's shares down
more than 3 percent.
Air France said on its web site it expected to operate 48 percent of
its flights on Monday, but "last minute disturbances are not
Tuesday will be worse hit again, with only 40 percent of flights
guaranteed to run, it said in a later statement.
New competition from low-cost rivals and fast-growing long-haul
carriers in the Gulf has prompted Europe's legacy carriers to speed
up restructuring measures and tweak their business models.
Lufthansa <LHAG.DE> is expanding low-cost services, Italian airline
Alitalia is set to undergo restructuring and loss-making Finnair
<FIA1S.HE> said last month it is taking rapid steps to cut its
But Lufthansa and Air France-KLM, which have both issued profit
warnings in recent months, are hampered by powerful unions in their
efforts to lower costs.
The main pilots' unions at Air France have called for strikes from
Sept. 15 to 22. And on Tuesday, Lufthansa pilots will hold an
eight-hour strike - their fourth in three weeks - in a dispute over
an early-retirement scheme.
Air France-KLM, Europe's second-largest network carrier, said
earlier this month it would move ahead with a plan to open new bases
in Europe under its Transavia brand in a bid to recapture market
share from low-cost carriers and Middle East rivals.
By expanding its low-cost operations, the airline is following the
example of Lufthansa, which is expanding budget services via its
little-known Eurowings carrier and considering a budget long-haul
Speaking to France Inter radio on Saturday, Air France Chief
Executive Frederic Gagey said the strike would cost the airline
between 10 and 15 million euros ($13-19 million) a day.
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Air France-KLM shares fell 3.7 percent, making them the worst
performers on the broad French SBF 120 index Lufthansa shares
fell 1.3 percent, making them the second-biggest loser on the
blue-chip index Dax, which was trading almost flat.
Air France made a narrow operating profit of 130 million euros in
2013, its first in three years, but recorded a net loss of 1.827
billion euros that included an impairment charge.
Gagey and Air France-KLM CEO Alexandre de Juniac were due to give an
update on the strike action at 1100 GMT (7 a.m. EDT) on Monday.
Juniac said he was concerned about the progress of negotiations with
pilots, saying positions had hardened.
(Editing by Andrew Callus and Mark Potter)
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