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Air France pulls in €480m net profit in three months

Air France revealed on Thursday it had made €480 million profit in three months - €400 million more than for the same period last year. Nevertheless the company has vowed it will go ahead with plans to cut 1,000 jobs.

Air France pulls in €480m net profit in three months
Air France staff protest job cuts. Photo: AFP

Air France-KLM profits took off in the third quarter, boosted by low fuel prices and heavy summer travel, but the airline said Thursday it will continue on its cost-cutting course despite protests by employees.

The company's operating profit almost reached €900 million, the highest level for the summer period since the Air France merged with KLM in 2004.

The airline group posted a net profit in the July-September period of €480 million ($526.5 million) compared with €86 million a year earlier when results suffered from a pilots' strike, it said in a statement.

“A favourable environment, principally characterized by lower fuel prices and strong demand over the summer, resulted in an improvement of Air France-KLM's results during the third quarter and first nine months of 2015,” said the group's board chairmen Alexandre de Juniac.

Quarterly revenues were €7.4 billion, up 4.2 percent compared with a year ago excluding the impact of the strike impact, and down 2.4 percent on a like-for-like basis.

The company's operating profit meanwhile almost reached €900 million, the highest level for the summer period since the Air France merged with KLM in 2004.

De Juniac stressed, however, that the results were not sufficient to close the “competitiveness gap” and promote growth, so the airline would continue with its restructuring plan.

“The implementation of the Perform 2020 plan is therefore vital since unit cost reduction is Air France-KLM's main lever enabling the group to return to a profitable growth path in a highly competitive environment,” he said, calling on “union representatives to resume negotiations as soon as possible”.

The struggling airline's restructuring plan made headlines around the world earlier this month when executives were manhandled by furious workers, sparking concerns that the violence was just one of the symptoms of France's overall economic and social malaise.

In a bid to mitigate the damage to the airline's image, Human resources chief Xavier Broseta, who was featured on front pages after he was forced to scale a fence, naked from the waist up, to escape angry union militants, has appeared in a video produced by the company saying “What you saw (in that incident) was not the real face of Air France”.

Another executive, Pierre Plissonnier, also had his shirt and jacket ripped in the rowdy scenes.

Five employees at the airline — which merged with Dutch national carrier KLM in 2004 — were detained and will face trial on December 2 for their alleged role in the violence.

But the employees' protests have continued with just last week thousands joining demonstrations across France after the airline confirmed it would axe 1,000 workers next year.

French President Francois Hollande said layoffs at the airline could still be avoided “if pilots do what is needed, if management makes proposals, if the ground personnel wakes up to certain realities.”

On Thursday unions were quick to react.

“Management is always saying there is still not enough… we are being endlessly squeezed, there is no view toward maintaining employment,” said Miguel Fortea, head of the CGT union at Air France, urging a meeting between the airline, the unions and the French government.

Shares in Air France-KLM sank 2.24 percent to €6.59 around midday in Paris.

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TRAVEL NEWS

German train strike wave to end following new labour agreement

Germany's Deutsche Bahn rail operator and the GDL train drivers' union have reached a deal in a wage dispute that has caused months of crippling strikes in the country, the union said.

German train strike wave to end following new labour agreement

“The German Train Drivers’ Union (GDL) and Deutsche Bahn have reached a wage agreement,” GDL said in a statement.

Further details will be announced in a press conference on Tuesday, the union said. A spokesman for Deutsche Bahn also confirmed that an agreement had been reached.

Train drivers have walked out six times since November, causing disruption for huge numbers of passengers.

The strikes have often lasted for several days and have also caused disruption to freight traffic, with the most recent walkout in mid-March.

In late January, rail traffic was paralysed for five days on the national network in one of the longest strikes in Deutsche Bahn’s history.

READ ALSO: Why are German train drivers launching more strike action?

Europe’s largest economy has faced industrial action for months as workers and management across multiple sectors wrestle over terms amid high inflation and weak business activity.

The strikes have exacerbated an already gloomy economic picture, with the German economy shrinking 0.3 percent across the whole of last year.

What we know about the new offer so far

Through the new agreement, there will be optional reduction of a work week to 36 hours at the start of 2027, 35.5 hours from 2028 and then 35 hours from 2029. For the last three stages, employees must notify their employer themselves if they wish to take advantage of the reduction steps.

However, they can also opt to work the same or more hours – up to 40 hours per week are possible in under the new “optional model”.

“One thing is clear: if you work more, you get more money,” said Deutsche Bahn spokesperson Martin Seiler. Accordingly, employees will receive 2.7 percent more pay for each additional or unchanged working hour.

According to Deutsche Bahn, other parts of the agreement included a pay increase of 420 per month in two stages, a tax and duty-free inflation adjustment bonus of 2,850 and a term of 26 months.

Growing pressure

Last year’s walkouts cost Deutsche Bahn some 200 million, according to estimates by the operator, which overall recorded a net loss for 2023 of 2.35 billion.

Germany has historically been among the countries in Europe where workers went on strike the least.

But since the end of 2022, the country has seen growing labour unrest, while real wages have fallen by four percent since the start of the war in Ukraine.

German airline Lufthansa is also locked in wage disputes with ground staff and cabin crew.

Several strikes have severely disrupted the group’s business in recent weeks and will weigh on first-quarter results, according to the group’s management.

Airport security staff have also staged several walkouts since January.

Some politicians have called for Germany to put in place rules to restrict critical infrastructure like rail transport from industrial action.

But Chancellor Olaf Scholz has rejected the calls, arguing that “the right to strike is written in the constitution… and that is a democratic right for which unions and workers have fought”.

The strikes have piled growing pressure on the coalition government between Scholz’s Social Democrats, the Greens and the pro-business FDP, which has scored dismally in recent opinion polls.

The far-right AfD has been enjoying a boost in popularity amid the unrest with elections in three key former East German states due to take place later this year.

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