Air France (AF, Paris CDG) and partner KLM Royal Dutch Airlines (KL, Amsterdam Schiphol) have announced they will postpone until December plans to establish bases outside of France and the Netherlands for its budget Transavia subsidiaries in a bid to stop a two week-old pilots' strike that has so far cost the company EUR20million (USD25.7million) a day in operating losses.
Air France CEO Alexandre de Juniac said on Monday that while the repositioning of Transavia France (TO, Paris Orly) and Transavia Airlines (HV, Amsterdam Schiphol) as regional European LCCs is both "strategic and urgent for the Group's future," management would be willing to enter into extended talks concerning the project's implementation.
Air France-KLM believes a repositioned Transavia brand is the remedy to intensifying competition on its medium-haul European routes from the likes of Ryanair (FR, Dublin International), easyJet (London Luton), Vueling Airlines (VY, Barcelona El Prat), and Wizz Air (W6, Budapest). The aim is to rapidly equip Transavia France with additional aircraft beyond the 14 currently in the fleet, with long term goals of operating a 100-strong fleet of aircraft by 2017.
Mr de Juniac did warn, however, that should talks reach an impasse, management would be forced to strongarm its proposal through.
"In these conditions, if the pilot organizations do not agree to the economic and social terms and conditions of the project put forward, Management will be forced to begin the formal procedure for denouncing the agreement to create Transavia France (signed in 2007). This agreement currently restricts the development of Transavia France; its withdrawal will make it possible to implement the project more quickly," a statement read.
The impasse concerns union demands to use Air France pilots employed on Air France contracts to operate flights on Transavia's network. They are also demanding Transavia's collective fleet of forty-four B737-800s be replaced with A320s. Management has rejected the demands claiming they would "inevitably lead Transavia France to failure."
The SNPL, for its part, has rejected management's deferment proposal claiming it "is just a smokescreen that does not offer any more guarantees than previous announcements, and does not solve any problems."
Management and unions are due to reconvene negotiations on September 25.
