Air France CEO resigns after employees reject wage offer

Air France CEO resigns after employees reject wage offer

Air France CEO resigns after employees reject wage offer

Air France shares tumbled in early Monday trade as investors acted on news the airline's CEO has resigned, as staff unions rejected a pay deal and are continuing their planned strike action.

The strike has had an impact of more than?300m euros, as reported by the airline.

"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.

Despite the French state owning 14.3% of the Air France-KLM parent group, the loss-making airline would not be bailed out, he said. Air France-KLM also forecast a "notably" lower income this year compared to 2017.

Air France shares continued on their downward spiral today following the shock resignation of CEO Jean-Marc Janaillac over the weekend.

The French government, which is the national carrier's largest shareholder with a 14 percent stake, has said it will not ride to the rescue and a meeting of Air France-KLM's board has been called for May 15 to decide on a management transition plan.

The group's share price has halved this year as it faces increasing competition from low-priced rivals and deep-pocketed Middle Eastern airlines, as well as the prospect of a sustained higher oil price.

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Air France management had offered workers a salary increase of 2 per cent in 2018 and a further 5 per cent over the following three years.

Mr Le Maire appealed "to the sense of responsibility of each of the air crew, ground staff, pilots who are asking for unjustified wage increases" but also warned that the French government should not be expected to backstop the company.

Air France staff are striking on May 7and 8 as a stale-mate over pay continues.

Profits at the Dutch sister company KLM, which has succeeded in cutting costs, rose in the first quarter, contrasting with losses at Air France.

Bloomberg reports that the airline group's stock has dropped as much as 14 percent as of Monday, the biggest decline since 2002.

The government's response is seen as a test of labour reforms launched by French President Emmanuel Macron.

"Air France will disappear if it does not make the necessary efforts to be competitive", he said on BFM television.

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