Turbulence ahead

The problems of Air France-KLM give French President Emmanuel Macron a practical opportunity. Chief executive Jean-Marc Janaillac said on Friday he would resign when staff torpedoed his salary agreement and created market chaos on Monday. The bankruptcy of the insolvent colleagues Alitalia gives an idea of ​​the toxic union and the policy of deficient state that France must avoid.

The announced departure of Janaillac is a large accumulation of orders for Air France-KLM, where the state is the largest investor by 14 percent. Since June 2016, he has worked in the conversion of mail and economy. He brought Delta Air Lines and China Eastern as shareholders in the industry and launched the low-cost daughter Joon. However, the airline did not meet its savings target in 2017 and is under pressure due to the increase in fuel prices. However, employees this year have demanded an annual increase of 5 percent compared to 2 percent proposed by Janaillac.

The attempt of Air France begins to resemble the history of mourning of Alitalia. The Italian siege mail was thrown into its second insolvency for a decade after the strike Italian trade unions rejected a transition plan in April 2017 with staff charges and salary cuts. The Italian government, which could not cope with the political consequences of establishing its star career, was rescued with loans of 900 million. EUR, the last of many wasted government expenditures.

Fortunately, Air France is not in the same painful financial situation as Alitalia. However, passenger growth since 2005 is slower than that of the main European competitors, the TRA data show transport advice. And a long-term struggle with the unions would cause greater harm: the curator estimates that the salary requirement has cost around 300 million. EUR from February 22, approx. 10 percent of EBITDA. Air France can not afford inflationary transactions from above, while competition from low-cost airlines is booming.

For Macron, the crisis opens a new front in the war to modernize the French company, which initiated labor market reforms. Workers who are angry at the president's plans to renovate the railroads have disrupted the local rail system for several months. The air attack now adds problems of the electorate. Resistance to the temptation to disturb Air France or other symbols in the company's state will generate short-term political costs. But it strengthens confidence in the president's pro-business impulse.