14 Days Long Strike Had Devastating Effect on Air France

Air France-KLM booked a net loss of 198 million euros ($226 million) in 2014. A 14-day strike by Air France pilots contributed to the situation had a devastating effect on the financial results of Europe’s second-largest airline.

“During the second half of 2014, activity was affected by a 14-day strike by Air France pilots, which had an estimated negative impact of 425 million euros on the operating result,” the statement said.

Had there been no strike, the firm would have made a net profit of 296 million euros, up from 130 million euros last year.

The pilots opted for strike option over the firm’s bid to expand its low cost operation Transavia France.

They also feared the plan could force well-paid Air France crew into penny-pinching Transavia jobs, and that the low-cost carrier might be used to take over Air France routes.

If we talk about numbers, the total turnover at the airline in 2014 was 24.9 billion euros, a drop of 2.4 percent compared with a year earlier.

Under a restructuring programme, Air France-KLM already cut 8,000 jobs, which is roughly 10 percent of its workforce. Right sizing was done in the three years to the end of 2014 through a voluntary departure scheme.

Air France Boeing 777-300

Air France Boeing 777-300

Going forward, it further plans to cut 1,300 jobs during the first half of 2015, company officials said Thursday.

In addition to internal rationalisation squeezing costs, Air France-KLM has also been getting help from outside factors to limit operating expenses and lure customers — particularly in North America and Asia.

“The economic environment has significantly changed because, after several months of stability, the oil price and the euro has declined appreciably, which changes our own parameters significantly,” said chief executive Alexandre de Juniac.

“The group unsurprisingly published degraded results,” wrote analysts at Aurel BGC following the announcement. “Net profit could have been back in the black without the strike, which considerably penalised results in the second semester. Despite that, results in the fourth quarter were positive.”

Air France stock went into a tailspin on the Paris Bourse, dropping by 7.4 % in morning trading Thursday. Investors were not happy about the situation.

Transavia ordered 20 Boeing 737-800 jets in a deal worth up to $1.8 billion (1.6 billion euros) at current list prices.

Source: Yahoo News

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