May 16, 2018

Air France-KLM names interim CEO

Air France-KLM has named new leaders following Jean-Marc Janaillac’s sudden exit as the result of a bitter industrial dispute over salaries.

Air France-KLM named Frederic Gagey, chief financial officer, as interim chief executive officer (CEO) following Janaillac’s sudden exit.

Former French minister Anne-Marie Couderc was named non-executive chairman at the French-Dutch group.

Gagey will sit on a new management committee with Franck Terner and Pieter Elbers, CEOs of the French and Dutch operations respectively, who will act as his deputies.

The Air France-KLM board indicated, however, that the temporary CEO will not have a mandate to find a way out of a pay dispute which management says has cost at least €300 million ($356 million) due to strikes since February.

… Janaillac’s gamble

Janaillac gambled his job on calling a vote among Air France staff on whether to accept a 7% pay rise over four years, saying he would quit if it was rejected.

He announced his resignation on 4 May after 55.44% voted against the deal, sending shares in Air France-KLM nosediving.

Air France-KLM reported a €269 million net loss for the first quarter of 2018, weighed down by the strikes.

The crisis has highlighted sharp cultural differences between Air France and KLM, which merged in 2004 to create Europe’s biggest airline.

The group’s profits have been drained by the French walkouts, with the first-quarter losses entirely due to Air France which lost €178 million compared to KLM’s profits of €60 million.

Unions maintain the pay increases offered are too little after six years of salary freezes.

Management warns, however, that improving company finances are vulnerable to competition from rival Gulf and low-cost European carriers.