Shirt-ripping Air France workers tear up another CEO in conflict

Bloomberg

For a brief moment these past weeks, it appeared that France’s once-mighty unions had lost their clout. Rail workers, once synonymous with crippling strikes, staged a walkout that went largely unnoticed as travellers shrugged, turning to buses and ride-sharing instead. But over at Air France, that well-oiled worker conflict played out in a decidedly more retro fashion.
On May 4, a visibly shaken CEO Jean-Marc Janaillac threw in the towel, resigning from a post he held for less than two years after failing to win backing from employees for his pay proposals. Calling the labour conflict a “huge waste,” the CEO said the only beneficiaries are rivals that have managed to move beyond the endless cycle of strikes that have dominated the European aviation industry in recent years.
While airlines from Deutsche Lufthansa to British Airways — and lately even low-cost specialist Ryanair — have all had their share of corporate dysfunction brought on by massive strikes, none have suffered the endurance and even violence of Air France’s labour ranks. The simmering conflict exploded into open carnage in late 2015, when two of the airline’s executives were physically assaulted by enraged workers, forcing them to flee and scale an industrial fence, their business suits and shirts ripped to shreds.

Falling Stock
The conflict has also strained the nerves of investors, who have sent the stock of the airline down 40 percent this year. Lufthansa, which last year finally manage to overcome years of pilot strife, has fared better losing less than a fifth in value this year, while British Airways parent IAG, which years ago broke the spell of strikes, has gained 4 percent so far in 2018.
Rotating two-day walkouts have taken their toll, with the carrier warning that full-year results are expected to be “notably below” 2017. The strikes will wipe out at least 300 million euros ($358 million) in operating profit, according to the airline.
At Air France, about 55 percent of staff who voted in an online poll rejected the offer made after 13 days of labour action by pilots, cabin crew and ground staff since February. While the outcome of the wage offer consultation isn’t legally binding, it will boost the negotiating position of unions at Air France. A majority of labour representatives have to approve any wage deal for it to take effect. Management offered a 7 percent increase over four years, while unions were pushing for a 5.1 percent raise this year.

Macron’s Reforms
French President Emmanuel Macron has pledged to overhaul his country’s economy. The rail strike has been the focus of the government, which has pushed for less job security for new hires and opening some lines to competition, a blueprint that Macron wants to apply to other areas of the economy.
Macron has already pushed through a liberalisation of labor law and cut taxes on capital in his first year in office, while future projects include changes to jobless benefits in Europe’s second-largest economy.
At Air France, labour representatives were largely unmoved by the CEO’s departure, and a strike planned for early next week will probably go ahead.