Air France is planning to layoff about 8,300 employees to cut costs. But, the company received a massive state bailout, which is making it difficult for the company to layoff employees.
The employees of the airline are taking voluntary exits. Air France KLM unit will take the voluntary exit. However, there are around 300 pilots, 2,000 cabin crew, and 6,000 ground staff who will be leaving their jobs. As a result, these cuts will affect about 17% of the workers. Though this situation can change after union and management talks.
Moreover, the company is not commenting on this situation. Air France is Europe’s second-largest airline. The airline is preparing to disclose the plan in the coming weeks as part of a strategic review ordered by Chief Executive Officer Ben Smith. The cuts will add to thousands of jobs on the line in the sector in Europe.
Hit to the Aviation Industry
The downsizing has hit the aviation industry as a whole. Frankfurt airport owner Fraport AG is planning to let go of 4,000 jobs to cope up with the current situation of the pandemic. CEO Stefan Schulte said that they would be discussing with the unions soon for laying off staff from the ground handling and administrative staff.
TUI AG, Europe’s biggest holiday firm, also plans to cut about 580 jobs in France. There are about 60% cuts in total as it shuts shops and closes brands there. Altogether, major European airlines, airports, and travel companies have up till not eliminated around 90,000 jobs.
Air France received a 7 billion-euro bailout from the French government. These include direct loans and state-backed commercial funding. Under terms of the bailout, the airline will make 40% cuts of its domestic capacity by the end of next year. The company has 46,000 people employed.
The airline shares fell by 2.5% in Paris trading. The airline market capitalization has more than halved since the start of the year to 2 billion euros.
However, the CEO of the airline does not want to impose layoffs. Junior Transport Minister Jean Baptiste Djebbari says that they can achieve domestic revamp “without social suffering” and may include voluntary departures. French car-maker Renault SA is also under similar cuts and a revamp of its domestic industrial sites.
The airline’s KLM’s arm is in talks about a Dutch bailout of up to 4 billion euros. KLM will be following its voluntary departure plan, which will be finalized soon. Smith said the same kind of plan was discussed at Air France. They will encourage the staff to move to Paris from the provinces.
However, in 2019 the French division lost about 200 million euros. The CEO of the airline indicated that these voluntary exit plans would not be enough to meet the needs. He says that they need an accelerated overhaul to meet the difficult situations and reach breakeven next year.