Air France's stock sinks as govt warns about its survival

Air France's stock sinks as govt warns about its survival

Air France shares have gone into a tailspin on the Paris stock exchange today amid warnings the strike-hit company could "disappear".

The French government owns 14.3% of the Air France-KLM parent group.

Air France-KLM posted a first quarter operating loss of €118 million ($141 million) last week, attributing €75 million of that loss to the strike impact.

The French government, which owns 14.3 per cent of the company, said Air France needed to reform or its survival would be at stake.

He called for responsibility on the part of striking workers, adding the airline's survival was at stake and that the French government will not offer a bailout. Despite the strike, the company said it would be able to maintain 99 percent of long-haul flights, 80 percent of medium-haul and 87 percent of short-haul.

In an electronic vote Friday, Air France employees rejected management's offer for a 2% pay rise this year and additional 5 per cent raise from 2019 to 2021.




And on Sunday, minister Bruno Le Maire warned Air France could "disappear".

The announcement of Janaillac's departure came as Air France-KLM released its first-quarter earnings, which showed a net loss of 269 million euros ($322 million), weighed down by three days of strikes which cost about 25 million euros per day according to the company. Even before today, the shares had lost 40 per cent in value, making it the worst performer on the 26-member Bloomberg World Airlines Index. "I will not explain to the French that we will.absorb the losses of Air France while Air France does not make the necessary competitive efforts to be at the same level as its major European competitor".

At the request of the board of directors, Janaillac will remain in his role as CEO and Chairman until the end of the company AGM on May 15 when "an interim governance solution" will be announced.

"Our demands are far from astronomical", Yannick Floc'h, vice-president of the SNPL pilots union, told BFM TV later in the day, adding there was room to find middle ground between the two sides.

Societe Generale analysts warned the weaker earnings performance could lead to a rift between Air France and its profitable Dutch partner, KLM.

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