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Air France Refuses to Help Aigle Azur or XL Airways Because it Would “Jeopardize” Staff Relations

Air France Refuses to Help Aigle Azur or XL Airways Because it Would “Jeopardize” Staff Relations

Air France Refuses to Help Aigle Azur or XL Airways Because it Would "Jeopardize" Staff Relations

The chief executive of the Air France-KLM airline group says the company has ruled out helping either XL Airways or Aigle Azur because doing so would “jeopardize” hard-fought staff relations on the French side of the business.  Aigle Azur filed for bankruptcy earlier this month and was forced to shutter its doors for the final time over the weekend when it failed to find a new investor for the business.

XL Airways suspended ticket sales last week and will likely suffer the same fate as Aigle Azur.  At least 1,150 jobs at Aigle Azur have been lost, while nearly 600 staff face redundancy at the smaller XL Airways.

Yet Ben Smith, chief executive of the Air France-KLM group told employees in a leaked email that he had ruled out helping either Aigle Azur or XL Airways despite being implored to do so by lawmakers, unions and even the CEO of XL Airways.

“I will never put in jeopardy what we have succeeded together for a year,” Smith told Air France staffers last week.  Smith was referring to the gradual mending of staff relations and morale following a series of crippling strikes last year over pay and conditions.

The strikes cost Air France at least €500 million and forced the departure of Jean-Marc Janaillac as chief executive of the group.  Smith has managed to repair relations and given the French side of the business a new direction and lease of life.

Anne Rigail, Chief Executive Officer, Air France; Benjamin Smith, Chief Executive Officer, Air France-KLM; and Anne-Marie Couderc, Board chairwoman Air France-KLM Group. Photo Credit: Airbus

He fears all that could be put at risk if the airline were to take on staff from other airlines who would join Air France on their old contracts.  The demise of both Aigle Azur and XL Airways has been partly blamed on generous and expensive employment contracts.

Contracts for pilots at the two failed low-cost long-haul airlines were said to be particularly old fashioned and uncompetitive.

But it’s not just staff contracts that are to blame for the failure of France’s second-largest airline.  Aigle Azur accumulated losses of more than $148 million after taking the risky decision to open long-haul routes to Beijing and Sao Paulo.  The airline was 49 per cent owned by the Chinese HNA Group – itself deeply indebted.

The unions blame “excessive” taxation on French airlines, as well as high airport charges.  Criticism has been levelled at Gulf airlines who have received generous State aid, while “social dumping” by foreign low-cost airlines has also been blamed.  In particular, unions call out Ryanair for imposing “scandalous working and compensation conditions” – meaning their costs are significantly lower than French competitors.

What they would like to see is the French government bail out these two ailing airlines – just like the German government helped Condor or how the Italian government continues to support Alitalia.  Unfortunately, the chance of a last-minute intervention from the French State looks incredibly unlikely and at most, a junior transport minister is promising to help find new jobs for all the redundant staff at both Aigle Azur and possibly XL Airways.

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