Bloomberg News

Air France Halts 12% of Flights as Crew Strike for Third Day

October 31, 2011

(Updates proportion of flights scrapped throughout, adds closing share-price decline starting in second paragraph.)

Oct. 31 (Bloomberg) -- Air France’s 15,000 cabin crew disrupted flights for a third day in protest at cuts to staffing levels, grounding about 12 percent of services including long- haul trips to Atlanta, Los Angeles, Montreal and Washington.

Air France-KLM Group fell 6.9 percent in Paris after its French unit said 88 percent of 1,000 scheduled flights would operate today, with about 120 halted yesterday and 130 on Oct. 29. Unions put the cancellations at 171 and 209 respectively.

Cabin-crew unions have called a strike for Oct. 29 to Nov. 2, spanning the All Saints Day holiday, one of France’s busiest travel periods, as they seek to halt plans to cut staff levels on Airbus SAS single-aisle jets. Air France is seeking to cut costs after an earnings slump forced the departure this month of Pierre-Henri Gourgeon, its chief executive officer.

“You don’t want strikes but if it means they’re confronting issues that need confronting then it could be good for the long term,” said Jonathan Wober, an analyst at Societe Generale in London who cut his rating on Air France-KLM to “sell” from “hold” today because of the carrier’s traffic-growth outlook.

‘Held Hostage’

Air France-KLM fell 41 cents to 5.51 euros in the French capital, where the company is based. Europe’s No. 1 airline has lost 60 percent this year, the worst performance on the six- member Bloomberg EMEA Airlines Index, which is down 32 percent.

“Clients are being held hostage by a five-day strike for which there’s no reason,“ Air France said yesterday. “Management negotiated day and night for 10 days and responded favorably to 90 percent of the flight attendant unions’ demands.”

The Paris airports of Charles de Gaulle, Europe’s second busiest, and Orly, as well as the terminal in Marseille, are among those affected. The dispute is deepening as Australia’s Qantas Airways Ltd. resumed flights today after a labor regulator barred stoppages that prompted the carrier to ground its fleet, stranding about 80,000 passengers over the weekend.

Air France is trying to restrict cancellations to high- frequency European routes, where it’s easier to rebook seats, spokeswoman Brigitte Barrand said today by phone. U.S. services were halted because the company was able to shift people to services flown by SkyTeam alliance partner Delta Air Lines Ltd.

Airbus Cuts

Air France’s flight attendants are represented by seven different labor groups, six of which called the walkout, according to Barrand. UNAC, the biggest single union, representing 27 percent of crew, isn’t involved, she said.

The dispute hinges on plans to cut one flight attendant from each of its Airbus A319 planes, leaving three, according to Barrand, who said the carrier has already agreed to keep the number at four for trips longer than three hours. It also gave ground on an issue regarding performance assessment, she said.

Unions said 50 to 60 percent of crew walked out, versus Air France’s estimate of 30 percent, and countered claims that they picked a busy period to protest by saying the company times announcements for holidays to pressure staff not to strike.

Air France-KLM reported operating losses in two of the past three fiscal years following 11 years of profitability and is targeting nothing more than breakeven for 2011. Its reputation also took a hit after safety experts said pilot training was a factor in a 2009 crash that killed 228 people, a factor that spurred the reinstatement of Jean-Cyril Spinetta as CEO.

International Air Transport Association figures published today show that global passenger traffic grew 5.6 percent last month, accelerating from a 4.6 percent gain in August, in what CEO Tony Tyler said was “a pleasant surprise.”

IATA said it’s still expecting a “general weakening” in coming months, with a continuing slump in freight traffic, which deepened to 2.7 percent in September from 2.4 percent in August, indicating the likely future trend for the passenger sector.

--With assistance from Alex Webb in Frankfurt. Editors: Chris Jasper, Chad Thomas.

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net; Vidya Root in Paris at vroot@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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