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Air France to set up separate low-cost long-haul unit

Air France-KLM has confirmed it is planning to set up a low-cost long-haul unit to operate flights from Paris Charles de Gaulle as part of its "Trust Together" efficiency initiative.

Chief executive Jean-Marc Janaillac said during a results briefing today that the new subsidiary would have at least 10 widebodies by 2020.

Internally dubbed "Boost", the project is aimed at serving "ultra-competitive markets" as a "response to the Gulf state airlines", he notes.

The objectives are to reopen routes that have been terminated as a result of lack of profitability, and to maintain routes that are under threat. However, 30% of operations are set to comprise newly added routes.

Pilots are to be recruited on a voluntary basis from Air France to work on "conditions adapted to its [the new airline's] competitive positioning", says Air France-KLM.

The group's outgoing finance chief Pierre-Francois Riolacci does not foresee any shortage of Air France pilots willing to transfer to the unit. He argues that the situation will be similar to the build-up of budget short-haul unit Transavia in recent years, for which the group found sufficient pilot volunteers within Air France.

However, flight attendants will be recruited externally, the group indicates: "An independent career path will be created to enable this new company to be operated at the level of market costs."

Ground operations will be handled by Air France.

Despite the cost-cutting efforts, Janaillac insists the product "will not be low-cost". Instead, the new unit is to represent a "simple, modern and innovative offer" on business and leisure routes "with standards comparable to those of Air France in terms of product quality and the professionalism of the crews".

Management has held initial talks with staff representatives, with detailed negotiations to be held over the coming weeks.

"There was no rejection at all of this project," says Janaillac about the initial talks: "The reaction was not negative, I wouldn't say it's positive – it's a French union. It would be, I think, a bit worrying if it is positive... But there was a feeling we have to work together."

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