Liberté, égalité, fraternité and Air France-KLM

Like his predecessors, newly-elected French president Francois Hollande has the right to free business-class travel on Air France-KLM flights.


However the durability of this arrangement could be tested not only by Hollande’s unwillingness as a socialist to be seen as exploiting the privileges of his office, but by his level of interference with the group’s attempts to restructure.


Hollande has been quoted in the French media as saying French companies had taken decisions to make redundancies, but had been told to refrain from cuts until after the election, something denied by Sarkozy’s team.


During his campaigning in which jobs were a key issue, Hollande was quoted as saying: “I won’t allow this cortege of redundancy plans to take place.”


Now it remains to be seen which companies the victorious Hollande was referring to, with a number of France’s biggest companies looking to restructure including banks, car manufacturers and telecoms companies.


With Air France-KLM due to implement the second stage of its Transform 2015 later this month or in June, it could be first to test how Hollande will react if it decides to make large number of redundancies or substantially cut salaries. With the French government owning around 15% of Air France-KLM shares and having representatives on Air France’s board of directors, Hollande could certainly make life difficult for both the group and the airline if he wished.


However analyst Neil Glynn of Credit Suisse who follows Air France-KLM feels it is unlikely that Hollande will radically interfere with its plans “given the extremely challenging financial condition of the company”.  With the government representatives having backed the group’s management in its plans so far, Glynn sees no reason why this would differ. 


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Air France-KLM’s chief financial officer, Philippe Calavia, also stated the group’s determination not to back down in its negotiations with unions over wage cuts as it seeks to achieve a 20% reduction in operating costs.


Speaking in a conference call reporting Air France-KLM’s 2012 first quarter results, he emphasises the need for “higher productivity and flexibility”. Describing these as an “absolute necessity”, he says: “We won’t back down, personally I won’t back down.”


Calavia’s words were interpreted by some observers as a statement not only to the unions, but to Hollande.


Perhaps the fact that Hollande is alleged to have flown into Paris on a Dassault Falcon 900 private jet after his election victory, rather than with the French flag carrier, could indicate what is to come?


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