Air France Passengers Numbers Fall in May Amid Strike Threat

(Bloomberg) -- Air France flew fewer people in May after strikes hampered operations, leaving KLM to prop up business at parent company Air France-KLM as the threat of further labor action hangs over the struggling carrier.

Passenger numbers at the Air France brand, entangled in a pay conflict with workers, fell 1.7 percent last month compared to a year earlier, the Paris-based company said in a statement Friday. At group level, they grew 1 percent, thanks to the Dutch arm.

French unions have warned that the summer could be a “difficult” few months. Labor discussions were left in limbo in May, after the staff rejection of a pay offer prompted Air France-KLM Chief Executive Officer Jean-Marc Janaillac to resign. He was replaced by an interim executive team that doesn’t have a mandate to continue negotiations. Unions could announce new strike days later Friday, following meetings with the temporary management.

The conflict has revived tension between the French and Dutch arms of the carrier, which came together 14 years ago. In May, KLM flew 2.98 million passengers -- compared to 4.27 million for Air France -- up 2.7 percent compared to the previous year. KLM’s CEO has deemed a de-merger of the two units "unthinkable."

The shares fell 2.2 percent to 6.83 euros at 9:28 a.m. in Paris, taking the drop so far this year to 50 percent.

Air France labor representatives have staged 15 days of walkouts since February, including four in early May, which cost the airline more than 400 million euros ($473 million). They’re demanding a pay raise of at least 5 percent this year to gain a bigger share of the company’s 2017 profit increase. Janaillac quit after a majority of employees voted against an offer to increase wages by 7 percent over four years.

Interim non-executive Chairman Anne-Marie Couderc “always repeats the same thing,” Jerome Beaurain, a representative of the Sud-Aerien union at Air France, said by phone Thursday. “She has no mandate to decide. Her role is to find a replacement for Jean-Marc Janaillac, but we need to resume negotiations. It’s out of question that we just wait it out the whole summer.”

French Economy Minister Bruno Le Maire has said he expects a new CEO to be named by September.

©2018 Bloomberg L.P.