Air France to Cut Hundreds of Jobs as It Slashes Capacity

(Bloomberg) -- Air France plans to cut as many as 465 jobs as it slashes short-haul capacity in a bid to stem losses amid competition from low-cost airlines and high-speed trains.

The biggest division of Air France-KLM Group will eliminate the positions on French domestic routes over the coming year, it said in a statement Monday. Consultation with unions and other stakeholders will commence soon and there will be “no forced departures,” it said.

Capacity cuts will amount to 15% of the short-haul network by the end of 2021, according to the company. While other full-service airlines are being hurt by falling fares, competition from TGV express trains is imposing extra pressure on Air France, which has racked up domestic losses of 717 million euros ($805 million) since 2013.

Group Chief Executive Officer Ben Smith has so far kept powerful French unions onside, ending a series of crippling strikes with new labor deals after taking over last year. The cost was revealed this month when the company posted a 303 million-euro first-quarter loss after staff expenses jumped 6.4 percent.

In addition to the train, Air France’s Hop! domestic arm has been battling discount carriers led by EasyJet Plc and Ryanair Holdings Plc, and in the longer term it’s unclear if the unit will carry on as now or whether the group’s own low-cost Transavia division will take over a chunk of services.

Jerome Beaurain, a representative of the Sud Aerien union, said by phone before the job cuts were confirmed that Air France has been undermining its domestic business for years and that it’s already “insufficiently staffed.”

La Tribune and Journal du Dimanche reported the job-cuts plan earlier.

To contact the reporter on this story: Ania Nussbaum in Paris at anussbaum5@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Frank Connelly

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