French government backs Air France over savings showdown with workers

French Prime Minister Manuel Valls said he would stand by Air France in its bid to slash costs .
French Prime Minister Manuel Valls said he would stand by Air France in its bid to slash costs .PHOTO: AFP

PARIS (BLOOMBERG) - French Prime Minister Manuel Valls said he'll stand by Air France in its bid to slash costs as the country's finance minister urged workers to accept plans to boost productivity as an alternative to job cuts.

Mr Valls told RTL radio on Wednesday (Oct 7) he's convinced talks between management and unions can resume, even after relations reached a new low following clashes at a works council meeting that saw two executives escape half-naked from protesters.

"Today's challenge is Air France's survival, and the state as shareholder fully plays its part by supporting management and the need for true reforms," Mr Valls said, adding that a deal "will require efforts" from the carrier's pilots, who failed to back the productivity plan before a deadline last week.

Finance Minister Michel Sapin said separately on I-Tele radio that it's in the best interests of staff to accept the proposals requiring staff to work longer hours for the same pay, since Air France's 'Plan B', which would cut 2,900 posts, "is much less pleasant in terms of jobs."

CONTRASTING RESPONSE

France's political establishment was left reeling after images from Monday's (Oct 5) clashes played around the world, threatening its international standing as a place to do business. The stance of President Francois Hollande's Socialist government so far contrasts with its response to a two-week strike last year, which saw Alexandre de Juniac, chief executive officer of Air France-KLM Group, forced to drop plans for a low-cost airline based outside the country.

Air France is recruiting Gilles Gateau, a deputy chief of staff to Mr Valls, as head of human resources, replacing Xavier Broseta, one of the managers attacked as workers stormed the works council briefing. Mr Broseta, who has played a central role in talks aimed at securing savings that would end a run of annual losses since 2011, is likely to get a new post in the department.

Philippe Evain, president of the SNPL union, which represents more than 70 per cent of Air France pilots, said on Tuesday (Oct 6) that he's ready to resume talks "as soon as all the players that can have an influence are present" - and that that should include the French state, with its 15.9 per cent stake.