Air France Board to Name Interim CEO in Bid to End Labor Dispute

(Bloomberg) -- Air France-KLM is preparing to name an interim chief executive officer to replace Jean-Marc Janaillac, who is quitting after failing to end a series of strikes that have roiled the airline’s French arm since February at a cost of more than 400 million euros ($477 million).

Board member and former French Minister Anne-Marie Couderc will be nominated to the position, Le Figaro reported, without saying where it got the information. Another director, Anne-Marie Idrac, declined the offer, the newspaper said.

The situation at the company is “preoccupying” and each side needs to take responsibility, French Transport Minister Elisabeth Borne said in an interview on France Inter radio Tuesday, declining to give the name of the interim CEO. The airline must remain competitive and the state isn’t considering selling its holding, she said.

Air France-KLM will detail its temporary management ahead of an annual shareholder meeting in Paris later in the day. The carrier, created in 2004 by the merger of French and Dutch national airlines, was thrown into turmoil when Janaillac said he would resign after employees rejected a wage offer. Since then, French ministers have warned that the carrier’s future is in jeopardy and urged local unions to end the conflict.

Air France-KLM shares fell 0.8 percent to 7.42 euros at 9:41 a.m. in Paris. The stock has slumped 25 percent since the rotating walkouts began in Feb. 22.

The interim CEO will have the task of re-starting negotiations with French unions who have demanded a 5 percent salary increase in 2018. Management offered them a 2 percent rise this year, followed by further increases later on.

Couderc, who heads Air France-KLM’s board nominations committee, is also a former manager at magazine-publisher Hachette and media distribution company Presstalis. She held positions in Alain Juppe’s right-wing government in the mid 1990s, handling employment matters.

“We want an appointee who has executive powers, so that negotiations can restart,” Beltran Ybarra, a representative at Air France’s main pilot union SNPL, said by phone. “We hope that the future CEO will be independent from the government and have strong expertise in the airline world.” SNPL is open to wage increases below 5.1 percent, he said.

The French government, which owns a 14 percent stake in the airline, has criticized employees for excessive wage demands, weighing in firmly on the side of management.

To contact the reporters on this story: Tara Patel in Paris at tpatel2@bloomberg.net, Ania Nussbaum in Paris at anussbaum5@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Andrew Noël, Tara Patel

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