Air France blamed intense competition from high-speed rail and low-cost rivals as it announced 465 job cuts and a scaling back of its domestic network.
The airline, part of the Air France-KLM group, said on Monday it would reduce headcount through voluntary redundancies over the next year, while capacity for travel within France would fall 15 per cent by the end of 2021.
Shares in the carrier were down 4.1 per cent by mid-afternoon in Paris, pushed lower by an analyst downgrade by Bernstein.
Anne Rigail, chief executive, said that while the airline would hire in some areas over the coming year, “we also have the responsibility to guarantee an even balance of our activities in certain sectors to secure their long-term viability”.
Air France said it faced “extremely fierce competition” from the TGV train service domestically and from no-frills airlines serving the rest of Europe.
It said it had lost 90 per cent of its market share on routes where high-speed trains connect Paris to the provinces in under two hours.
It criticised low-cost carriers for not contributing “to developing employment in the regions where they operate, taking advantage of European mobility and basing employees in jurisdictions with lower labour costs”.
Air France’s domestic business reported a loss of €189m in 2018, taking cumulative losses since 2013 to €717m. It operates domestic flights through Air France and its subsidiary Hop.
The company faces a struggle to find 500 employees who are willing to leave, according to one analyst who did not wish to be named.
“If they could get away with it, the stock would be up, not down,” the analyst said. “That tells you what the market thinks about it.”
Frédéric Gagey, Air France-KLM’s chief financial officer, flagged the voluntary redundancies to analysts at the start of May.
The French airline, which has suffered from a poor relationship with its unions in recent years, will have to navigate the job losses carefully. Strikes over pay cost it €335m in the first half of 2018, and Jean-Marc Janaillac quit as Air France-KLM chief executive a year ago after losing a staff vote over a pay deal that had been rejected by unions.
Air France signed an agreement with its pilots’ union in February, bringing an end to the costly period of industrial action. Ben Smith, Mr Janaillac’s replacement as chief executive, said at the time that the group was “now in a position to begin implementing more ambitious plans and winning back its European leadership position”.
Unions on Monday reacted cautiously to the plans. Jean Hédou, who represents transport workers at Force Ouvrière, said his union was still assessing the move. “It is too early to judge,” he added. “We are always against people losing their jobs but there is a difference between voluntary measures and firings.”
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