Contributor - Europe

Cathy Buyck

In the two weeks since assuming his role as CEO of Air France-KLM, Ben Smith has already made several changes aimed at breaking the deadlock with Air France unions and bringing the loss-making French unit back to profitability. He has assumed the chief executive position of Air France from Franck Terner&nbsp;and the airline’s head of human resources, Gilles Gateau, is leaving. Meanwhile, Smith has recruited former Air Canada colleague Oltion Carkaxhija to lead the negotiations with trade unions.&nbsp;

 


A syndicate of nine trade unions representing pilots, cabin crew, and ground and maintenance staff at Air France is meeting with Smith today to discuss their long-standing wage increase demand, an explosive issue that led to 15 days of strikes earlier this year—costing the airline €335 million—and the departure of Smith’s predecessor at the Franco-Dutch group, Jean-Marc Janaillac. The Frenchman stepped down in May after failing to secure the support for his proposal to increase salaries by 2 percent in 2018 and 5 percent in 2019, 2020, and 2021.

 


The multi-union syndicate, which does not include all major trade unions at the French airline, wants an increase of 5.1 percent for all personnel to compensate for the inflation over the period from 2012 to 2017.

 


Today’s meeting is a working get-together suggested by Smith to gauge the different positions and not a formal round of negotiations, though the sides will discuss the thorny topic of remuneration, an Air France executive told AIN.

 


Smith already held one-to-one meetings with most Air France trade union representatives since assuming his position as Air France-KLM CEO on September 14. Last week the former Air Canada president and chief operating officer became also chief executive of Air France after Terner resigned as head of the French airline. The departure of Terner came amid demands for his dismissal by the union syndicate, which holds him and human resources director Gateau responsible for the failure of social dialogue earlier this year.

 


Gateau’s departure appears to indicate that Smith seeks to break the deadlock and start anew. Gateau will leave the company on October 12, Air France confirmed to AIN, and former Air Canada executive Oltion Carkaxhija will join the airline to lead the negotiations with the trade unions.

 


“I am well aware of company employees' expectations, including salary issues,” said Smith in a statement announcing his appointment as Air France CEO. “I wish to offer a new approach.” However, Smith also emphasized the fact that Air France employees will need to assume some responsibility and that blaming low-cost carriers and the Gulf airlines for Air France’s losses no longer stands. “It’s not as if this airline is being attacked in a disproportionate or unjust way, it just has a competitive model that doesn’t work,” he told the Financial Times in an interview. “We cannot afford to be arrogant and assume we have any more of a right to our customers than our competitors do; we have to earn their business each day. Fighting our competitors, not ourselves, is our ticket to success,” he said.

 


The Air France board has appointed Smith to head of the French national carrier for a transitional period, until December 31 at the latest. His priority “will be to define Air France's short and medium-term strategic vision, find a solution to salary issues and set up a new company governance structure," said Anne-Marie Couderc, chairman of the Air France-KLM and Air France boards of directors.

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