Tue, May 08, 2018 - Page 10 News List

Air France shares tumble after CEO departure

Bloomberg

Air France-KLM Group tumbled in Paris trading, as Europe’s biggest airline battles turbulence triggered by CEO Jean-Marc Janaillac’s planned resignation and a deepening labor conflict.

The stock dropped as much as 14 percent, the most since 2002. Even before yesterday, the shares had lost 40 percent in value this year, making it the worst performer on the 26-member Bloomberg World Airlines Index.

The carrier was thrown into disarray on Friday last week, when Janaillac said he plans to submit his resignation to the board tomorrow after workers rejected his final wage offer — an outcome that even caught some unions by surprise.

However, their defiance continued yesterday, as another two-day strike began and the airline scrapped about 15 percent of services.

Air France has said that the labor action would wipe out at least 300 million euros (US$357.7 million) in operating profit this year.

While the airline maintained almost all long-haul flights during the latest walkout, it was forced to cancel one in five medium-haul services yesterday from Charles de Gaulle Airport in Paris and short-haul trips from Orly were also affected, according to its Web site. Further disruptions are predicted for today, as the industrial action is scheduled to continue.

The shares fell as much as 14 percent, the most since Sept. 30, 2002, and were trading down 10.5 percent at 7.24 euros at 11:51am in Paris, giving a market value of 3.1 billion euros.

French Minister for Finance and Economy Bruno Le Maire on Sunday said that the worker’s demands were unjustified, urged them to “show responsibility” and said that taxpayers would not bail the company out.

Air France on Friday said that rising expenses for jet fuel plus a stronger euro would add to the burden caused by a string of walkouts by staff fighting for higher wages.

Flights by KLM and Hop! would not be affected by the walkout, Air France said, adding that customers with tickets for travel yesterday or today can rebook free of charge.

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