June 18, 2020 / 6:22 AM / 22 days ago

Air France urged by minister to avoid forced layoffs

French Finance Minister Bruno Le Maire leaves following the weekly cabinet meeting at the Elysee Palace in Paris, France, June 17, 2020. REUTERS/Gonzalo Fuentes/Pool

PARIS (Reuters) - French Finance Minister Bruno Le Maire called on Air France (AIRF.PA) to avoid compulsory layoffs, as the airline prepares to cut thousands of jobs in response to the coronavirus crisis.

“Some readjustments will be necessary for Air France,” Le Maire said on Thursday following media reports that the airline plans to eliminate 8,000-10,000 jobs. “What I’m asking of Air France is that there should be no forced redundancies.”

A spokeswoman for Air France-KLM group declined to comment.

Air France is preparing voluntary layoffs in response to the crisis, Chief Executive Ben Smith told Reuters on May 7 as he announced a 20% cut to structural capacity - which potentially affects some 9,000 of its 45,000 jobs.

Competitors are moving fast to reduce staff numbers in the face of a deep global travel slump unleashed by COVID-19 and resulting lockdowns. Among them, British Airways (ICAG.L) is cutting 12,000 jobs and Ryanair (RYA.I) at least 3,000, while Lufthansa (LHAG.DE) is seeking as many as 22,000 departures.

Smith, who has negotiated more flexible labour deals since his 2018 appointment as Air France-KLM CEO, must tread carefully to keep the peace with unions as well as the French government, which owns 15% of the airline group and has underwritten a 7 billion euros ($7.9 billion) bailout for Air France.

The government message has been clear from the start that redundancies must be voluntary, a source close Air France management told Reuters. “While you’re in partnership with the government and you’ve got loans from them I think you’ve got to be very balanced as to what you do.”

In response to the pandemic, Air France has said it will accelerate moves to expand its low-cost Transavia division and shrink its domestic network, which lost 200 million euros last year and is operated in part by its short-haul carrier Hop!

The restructuring plans are to be presented at a strategic workforce planning meeting now expected in early July, according to union and company sources.

Reporting by Laurence Frost and Sudip Kar-Gupta; additional reporting by Leigh Thomas; editing by Jason Neely and Jane Merriman

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