Friday, 17 August 2018

Air France-KLM shares down as Ben Smith named as new CEO

As expected by the recent announcement that Benjamin Smith has been appointed as the new CEO of Air France-KLM, has angered unions are accusing the group of handing control to a foreigner and not protecting Air France’s interests.  Shares in the big European airline group shares fell on Friday and are expected to fall further next week. Also, having a negative impact on the stock market is news that KLM's Dutch pilots are threatening to strike over working conditions. 

Air France-KLM shares fell some 4 percent during early trading and were among the worst-performing stocks on the Paris SBF120 index. Leading analysts say the fall is directly attributed to the unhappiness of the unions over the appointment of Ben Smith.

Benjamin Smith is currently serving his notice period at Air Canada and will take up his new post towards the end of September, will have to endure a baptism of fire. He will have to deal with a very troubled and unhappy workforce at Air France that have already cost the airline at least €335 million this year. Unions are said to be meeting at the end of this month to discuss a further raft of strike action. 

Smith will also have to deal with Dutch pilots union VNV who have confirmed they will take industrial action in the form of strikes should the airline’s management not improve offers to ease their workload. The union wants KLM to start hiring new cockpit crew as soon as possible in order to give pilots more time in between flights. The airline has said it is trying to recruit new staff, but it wasn't possible to meet all the union’s demands. VNV have advised that the walkouts could begin in as little as four weeks time.

In recent years the Air France-KLM group has embarked on a series of cost-cutting measures, Air France has been somewhat less successful in making savings than KLM.  The Dutch airline managed to agree several cost cutting deals with its staff in recent years, which improved its profitability and put it in a stronger position than French partner Air France.  “Our pilots have given up a lot in recent years, making KLM profitable. Now it’s time for KLM to deal with its exhausted staff." a spokesperson for VNV told the media.