PARIS, FRANCE (BNO NEWS) — French airline Air France will cut more than 5,000 jobs, or nearly 10 percent of its domestic workforce, by the end of next year in an effort to return to profitability and to regain growth momentum, the company announced on late Thursday.
Alexandre de Juniac, chairman and CEO of the French flag carrier, said the cuts are necessary for the airline to return to profitability and to provide a better customer service. “Air France is facing a fundamental choice about its future,” he said. “I have every faith in the success of our plan, which will enable Air France to return to the forefront of the major international airlines.”
In an effort to minimize the impact of the job cuts and to avoid conflict with trade unions, the airline hopes it will be able to avoid forced layoffs by encouraging voluntary retirement, voluntary departures, work-sharing and allowing full-time employees to switch to part-time work.
“If we all make the necessary equitably distributed efforts, there will be no forced departures,” de Juniac said. “The signature of the agreements in the next few days will involve all Air France staff and will illustrate everyone’s determination to put Air France back on the road to recovery.”
Under the so-called Transform 2015 plan, the airline will eliminate 5,122 jobs out of a domestic workforce of 49,301 by December 2013. It expects 1,712 of those job cuts will be through natural departures which will not be replaced while the remaining cuts to be made will be divided between 2,056 ground staff, 904 cabin crew and 450 pilots.
In addition to the job cuts, the airline intends to regain growth momentum by making a difference in the quality of its products and services, especially in First and Business class on long-distance flights. “As soon as the agreements are signed, a vast investment program representing several hundred million euros in new cabin facilities will gradually be implemented,” the airline said in a statement.
The airline also intends to restructure short and medium-haul operations by the grouping together of Airlinair, Brit Air and Regional operations within a new regional hub, resulting in a 15 percent cost reduction. The airline’s subsidiary Transavia France will increase its frequency of existing flights from 2013 and add new routes in France.
The French airline merged with Dutch airline KLM in 2004 to create Air France-KLM SA, but both airlines have retained their brands. The parent company carries more than €6 billion ($ 7.5 billion) in net debt and reported an operating loss of €597 million ($ 748 million) in the first quarter on revenues of €5.6 billion ($ 7.0 billion).