Air France announced plans to reduce staff and reduce its short- and medium-distance fleet in an effort to cut costs. The airline said that services that are losing money and are deemed as having no prospect of making money would be suspended. The executives at the company are trying to return the airline to growth in the face of rising competition and increasing fuel bills.
Alexandre de Juniac, chief executive of Air France (a unit of Air France-KLM), said in a statement, “The objectives are ambitious but feasible. Air France needs to renovate its organization and increase productivity by 20 percent.” He added that he aimed to return Air France to profitable growth against a backdrop of “extremely fierce international competition” in 2014. Air France-KLM is 15.9% state-owned.
The company wants to shed €2 billion ($2.5 billion) of debt and operating costs over the next three years by cutting spending on its fleet and staff. The company plans to completely overhaul its French operations, which have proved unprofitable. The company also announced that it would attempt to beef up its Transavia low-cost airline and add new routes to its long-distance network. The company is aiming for 20% efficiency gains by 2014.
Air France will cut around 2,400 jobs over the next three years by not replacing staff. Some reports have indicated that there may be a voluntary redundancy plan put into place to reduce staff by a further 2,500 employees, although the company has not confirmed this. Air France says it wants to avoid layoffs, but long-running labor accords are hindering its attempts to compete with low-cost carriers.
The costs for the airline’s staff are higher than at the International Airlines Group, which includes British Airways and Iberia, and Lufthansa. Air France said that discussions with ground staff, flight deck, and cabin crew unions have been under way since the end of March. The company hopes to sign new labor agreements by the end of June.