Air France-KLM names interim CEO to end strikes

Bloomberg

Air France-KLM named finance chief Frederic Gagey as interim CEO to replace Jean-Marc Janaillac, who quit after failing to end a series of strikes that have roiled the airline’s French arm since February.
Board member and a former deputy French minister Anne-Marie Couderc will become interim non-executive chairman, according to a statement. The carrier is setting up a three-member management committee that will include Gagey, who will remain CFO, as well as the heads of the Air France and KLM arms, Franck Terner and Pieter Elbers.
In naming the new management team, the board said it deeply regrets the strikes, which will “have a negative impact on the group’s financial results.”
It also said that Air France CEO Terner doesn’t have a mandate to “take decisions that would jeopardise the growth strategy.”
The change of management comes in the midst of a labour conflict that French Transport Minister Elisabeth Borne termed “preoccupying” on Tuesday, saying Air France is less competitive than both the KLM arm of the carrier and rival Lufthansa. The company has said the strikes have cost more than $477 million.
The embattled French airline gave details of the temporary management team ahead of an annual shareholder meeting in Paris.
The carrier, created in 2004 by the merger of French and Dutch national airlines, was thrown into turmoil this month when Janaillac said he would resign after employees rejected a wage offer. Since then, French ministers including Borne have warned that Air France-KLM’s future is in jeopardy and urged local unions to end the conflict. Air France-KLM shares fell 2.3 percent to 7.30 euros in Paris. The stock has slumped 27 percent since the rotating walkouts began on February 22.
Gagey, 61, is a long-time Air France insider, having joined Air Inter, which eventually merged with the carrier, in 1994. In 2013, he took the helm of Air France when Janaillac’s predecessor Alexandre de Juniac became CEO of the Franco-Dutch airline. Gagey was replaced at the helm of Air France by Franck Terner.
The interim CEO will have the task of re-starting negotiations with French unions, which have demanded a 5 percent salary increase in 2018. Management offered a 2 percent rise this year, followed by further increases later on.