PARIS: Cheap fuel prices are doping the finances of airlines, but analysts say European giant Air France-KLM may still be forced to make further job cuts to cope with stiff competition and a sluggish economy.
Despite the company’s assertions that no decisions have been taken, the leaders of Europe’s second largest airline have for months seemed to be preparing the ground for the inevitability it will have to shed further staff.
Last May, Air France chief executive Frederic Gagey said during a visit to Shanghai that the company aimed for an operating profit in 2014. Air France-KLM, which lost 1.8 billion euros in 2013, hasn’t turned a profit since 2010.
“If we were in the red we would be at more of a disadvantage, which would change the terms of social dialogue,” Gagey told reporters.
He said the heavily indebted French flag carrier would make its decision solely on the basis of annual results to be announced on February 19, hinting that new red ink would lead to new job cuts.
Since then the airline has suffered a crippling strike and warned that results will fall short of targets.
Unions are expecting bad news at a meeting with management on Thursday.
Under its Transform 2015 restructuring program, Air France-KLM already cut 8,000 jobs in the three years to the end of 2014—through a voluntary departure scheme—or 10 percent of a workforce today estimated at some 95,000.
The French daily Le Figaro reported recently the French-Dutch group plans “in the coming months” to cut another 5,000 jobs.
But a company spokesman told Agence France-Presse: “Nothing has been decided regarding a possible new voluntary departure plan; so it is completely premature to talk about one, either about whether it will happen in principle or about its size.”
However, Air France-KLM boss Alexandre de Juniac complained to investors last September of a “difficult” environment, with geopolitical instability in several markets.
He called for “strict financial discipline” and stressed the need to maintain the pace of “reducing unit costs by 1.0 to 1.5 percent a year” through improved productivity.