5,000 jobs to be cut by Air France-KLM | WPN World People News

Europe's largest airline Air France-KLM is proposing to trip its French workforce by more than 5,000 by the end of 2013 in bid to cut annual costs by $2.5 billion and return to profitability.

The airline has not revealed reveal how many of the job cuts will come from its French cargo unit, which has already said it will cut its freighter capacity by 20 per cent and stop chasing global market share.

Still under negotiations with the company's labor representatives, the planned jobs cuts are part of a wide-ranging restructuring program including asset sales and a postponement of expansion plans as the carrier struggles to bring costs, aggravated by the high fuel costs, in line with revenues.

Warning that the enforced layoffs are "unavoidable" if labor unions reject the Franco-Dutch company's business plan, Air France, which merged with Dutch rival KLM in 2004, has assured it would try to avoid compulsory layoffs by pursuing other options like early retirement and attrition, voluntary redundancies, etc.

"Air France is facing a fundamental choice about its future," Alexandre de Juniac, CEO of the French part of the company, said in a statement issued after a meeting with union officials.

"Our business plan has two ambitions: to ensure Air France returns to profitability, and to better serve our customers. If we make all the necessary equitably distributed efforts, there will be no forced departures," he said.

Among the plans being pursued is Air France Cargo's "Transform Plan" involving sale of one Boeing 747-400 extended range freighter, reducing its fleet to two 747-400s and two Boeing 777 freighters down from a 12 cargo aircraft in 2009.

Air France Cargo is also restructuring operations with KLM Cargo and its Martinair subsidiary, which has taken over many of the freighters from the two companies and currently has six 747-400s and seven MD-11Fs. The three carriers have been operating a single network since June 1.

Air France Cargo is currently reducing its exposure to the weakening Chinese market it stopped freighter service to Shanghai- and is refocusing on West Africa, the Indian Ocean, North America, Mexico and Japan.

Caught in a bind with increasing competition from low-cost budget carriers in its domestic and medium-haul European routes and aggressive competition from Gulf and Asian carriers on long-haul routes, the airline's austerity plan aims slashing costs where it can by 20% to revert to an even keel by 2014.

The job cuts, if delivered, would be a major step in that direction, analysts said.

Source: Paris News.net