No Canadians: Air France unions insist on a French CEO

PARIS, France – Air France-KLM was tipped to name Canada’s Ben Smith as its new chief executive on Thursday, August 16, whose mooted nomination has run into immediate resistance from the group’s powerful unions.

It was “inconceivable that the Air France company, French since 1933, falls into the hands of a foreign executive whose candidacy is being promoted by a competitor,” said a statement from 9 out of 10 Air France unions on Thursday.

The foreign competitor appeared to be Delta Airlines, the US airline which owns 8.8 percent of the capital of Air France-KLM, the parent group formed out of the merger of Air France and KLM of the Netherlands in 2004.

The union statement added that the new boss needed “intimate knowledge… of the French social model,” which often results in confrontations between employees and management.

Widely tipped in the French media to be unveiled as the new CEO later on Thursday after a board meeting, Smith won approval from the French government which retains influence over the group through its 14.3-percent shareholding.

“I think he’s an excellent candidate,” Economy Minister Bruno Le Maire said during a press conference in southwest France.

One of Smith’s biggest tasks would be negotiating a new pay deal with the French labor groups behind a series of strikes between February and June that forced out former boss Jean-Marc Janaillac.

He has experience of sensitive labor negotiations, having led talks with pilots’ and flight attendants’ unions at Air Canada ahead of the launch of low-cost operator Air Canada Rouge.

But his proposed salary, reported to be several times higher than that of Janaillac, could also undermine goodwill towards him from employees, who have suffered years of cutbacks and job losses.

The union representing pilots at KLM, the Dutch arm of the group, has also made fresh pay demands and threatened strikes unless a new deal is offered to its members.

Management shakeup

The Franco-Dutch airline has been searching for a new boss since Janaillac resigned in May, having gambled his job on getting Air France staff to accept a new pay deal after months of strikes.

Smith’s nomination could also be accompanied by a shake-up of the company’s governance, with the splitting of the roles of chairman and chief executive, which were previously held by the same executive at the company.

Les Echos business daily, which reported the change, said the new management structure would bring the company into line with American and British practice.

Air France shares have plunged more than 35 percent since the start of the year, although they have stabilized since Janaillac’s departure.

The group this month estimated the cost of the 15 days of French strikes between February and June at $391 million.

After years of losses and restructuring, the company has returned to profit, leading to the increased pay demands from unions.

It reported net profits of 109 million euros for the second quarter – down sharply from 593 million for the same period last year, although that figure was boosted by new accounting rules. – Rappler.com