Air France Preparing For 8,300 Voluntary Job Cuts Following Huge State Bailout

Air France, a subsidiary of the Air France-KLM Group, is preparing to cut 8,300 jobs by offering staff incentives to leave the airline voluntarily.

Bloomberg reported that the measure was designed to prevent a political backlash since Air France-KLM received a massive 11 billion euro ($12.4 billion) taxpayer-funded bailout from the French and Dutch governments.

Air France will reportedly seek to eliminate 300 pilots, 2,000 cabin crew and 6,000 ground staff – amounting to 17% of its workforce.

The restructuring is part of a strategic review ordered by Air France Chief Executive Officer Ben Smith and will come in the wake of thousands of job cuts announced by other major European air carriers, including British Airways and Deutsche Lufthansa.

However, job cuts at Air France could be politically risky since the French government alone is providing 7 billion euros ($7.9 billion) of the aforementioned state bailouts. By offering “voluntary” terminations and avoiding enforced firings, Smith hopes to pacify unions and French government officials.

Junior Transport Minister Jean-Baptiste Djebbari said on Wednesday that any changes at the airline should be achieved “without social suffering.”

Under terms of the bailout, Air France, which employs about 46,000 people, also agreed to cut domestic capacity by 40% by the end of next year and to reduce its carbon emissions.

The airline group’s Dutch subsidiary, KLM, has already planned to conduct similar voluntary job cuts.

But Smith warned that since Air France lost 200 million euros ($224 million) in 2019 – prior to the pandemic – the voluntary job cuts may not be sufficient to meet strict environmental targets and to break-even financially by next year.

Moreover, the 7 billion euros allocated to Air France is part of a 15 billion euro ($16.8 billion) plan by the French government to rescue the country’s aerospace industry.

Under terms of this package, airlines and aviation firms will have to increase investment in alternative technologies such as electric and hydrogen aircraft.

Bruno Le Maire, the French finance minister, said the government would do “everything to support this French industry that is so critical for our sovereignty, our jobs and our economy.”

Separately, Air France plans to resume a wide array of passenger flights this summer as travel restrictions ease across Europe and elsewhere.

France’s national carrier expects to run flights to almost 150 destinations, or about 80% of its usual network.

“We can see that people need to travel again and will gradually be resuming services to 150 destinations in France, Europe and the rest of the world this summer,” said Air France CEO Anne Rigail. “After this difficult period, we are delighted to be welcoming our customers back on board, so that they can travel this summer and be reunited with their loved ones.”

Aviation journalist Bulent Imat wrote that priority will be given “to strengthening its domestic network with the resumptions of routes between Paris and the French regions, as well as inter-regional routes, particularly to and from Corsica.”