There has finally been a breakthrough in talks between Air France and trade unions who represent over 75% of staff at the French flag carrier in a long-running and very bitter dispute over pay and conditions. The dispute is said to have cost Air France at least €500 million after a series of strikes grounded flights over the Summer.
Announcing the news late on Friday afternoon, Air France said it had signed an agreement on a new pay proposal with a number of unions who represent ground staff and cabin crew. As the majority of unions have signed up to the new deal, it can be legally implemented across the entire company.
Unions had initially demanded an immediate 6% pay rise but have now settled for a two-step proposal after marathon talks between the two sides concluded. Staff will initially enjoy a 2% raise for 2018 which is backdated to 1st January. A second 2% pay raise will come into effect on 1st January 2019, with a minimum payment of at least €50. The pay raise will not be linked to the airline’s financial results.
As we reported a few days ago, a major sticking point in the negotiations had been whether the pay raise to take effect in 2019 would be the only wage increase next year. However, Air France management has now agreed to open negotiations in October 2019 to agree on a separate pay award which will be backdated for the whole year.
In a statement to members, a syndicate of unions which represent various work groups at the airline said strike action had been key in persuading the company to improve its offer. The strikes led to hundreds of flights being cancelled, although Air France had tried to downplay the effect of the action on its operation.
The deal comes just weeks after new chief exec, Benjamin Smith took over the helm at the airline. Smith became the first foreign chief executive at Air France after Jean-Marc Janaillac abruptly resigned in May following his failure to end the pay dispute.
Despite initial resistance from the airline’s trade unions to his appointment (who claimed a foreigner wouldn’t have Air France’s best interests at heart), it appears Smith has managed to find a path which makes both sides happy. Over the coming months and years, Smith will need to work out how to cut costs and make Air France more competitive, while avoiding any further large-scale fights with his own employees.
Air France is a member of the Franco-Dutch, Air France-KLM Group, which as the name suggests also includes Amsterdam-based KLM, as well as subsidiaries such as Joon, Hop! and Transavia. KLM has already successfully managed to cut its overheads and is said to have tired of the bloat and waste at Air France which is dragging the entire group’s performance down.