Published: Sun, May 06, 2018
Money | By Armando Alvarado

Air France-KLM CEO To Resign After Staff Vote No

Air France-KLM CEO To Resign After Staff Vote No

If the proposal was rejected by the employees, he would resign.

Janaillac put his neck on the line in April when he attempted to stand up to the potentially ruinous holdouts of its unions, whose strike actions have so far cost the company some $350 million.

Air France-KLM stock traded down $0.73 during mid-day trading on Friday, reaching $9.16. The company had revenue of $7.34 billion during the quarter, compared to the consensus estimate of $8 billion. analysts expect that Air France-KLM will post 2.71 earnings per share for the current fiscal year.

Staff and management at the carrier have been locked in a dispute over pay since February.

"I settle for the results of this vote and can tender my resignation to the boards of Air France and Air France-KLM in coming days", stated Janaillac, after 55.44 % of Air France employees voted in opposition to accepting a pay rise of seven % over 4 years.

"I hope that my departure will spark a more acute collective awareness", he added.

The 65-year-old chief executive, who had been in the job for less than two years, earlier promised to quit if the pay deal was rejected.

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In the job for less than two years, Janaillac had been battling to cut costs at the French national carrier to keep up with competition from Gulf carriers and low-priced airlines.

Air France needs to cut costs to keep up with leaner rivals in Europe.

The CEO of Air France, Franck Terner, will oversee the day-to-day operations of the company.

Labour reforms launched by French President Emmanuel Macron have also led to strikes by employees of the state-owned SNCF rail company.

Rivals British Airways (ICAG.L) and Lufthansa (LHAG.DE) have already undergone painful cost-cutting in recent years as they battled to compete with the rise of low-priced carriers in Europe and new competition from Gulf carriers.

"There is inevitably some pain for staff when structural changes are made, but once that is dealt with, you're left with a much healthier company", said aviation consultant John Strickland.

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