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Air France-KLM shares plummet in aftermath of CEO Janaillac 's resignation

08 May 2018

By 1455 BST, Air France shares were 9.91% lower at €7.29.

Unions have been calling for a 5.1% 2018 increase, arguing that salaries have stagnated in recent years.

Janaillac initiated a staff-wide consultation April 26 in a bid to end the dispute after unions rejected the carrier's latest offer of a multi-year "growth pact" pay proposal.

The French government owns 14.3% of the Air France-KLM parent group.

"The state is not there to pay off debts, come to the rescue of companies that would not make the necessary efforts of competitiveness", he told the French news channel BFMTV.

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The airline said it anticipated operating 75 percent of medium-haul flights and 95 percent of long-haul services to and from Paris Charles de Gaulle airport, and 82 percent of short-haul flights.

Finance Minister Bruno Le Maire on Sunday urged the company and workers to resume talks, delivering a blunt assessment of the airline's future.

On Friday Air France announced a net loss of €269 million in the first quarter of 2018 and said the strike is set to cost the airline at least €300 million over the course of the year.

He called for responsibility on the part of striking workers, adding the airline's survival was at stake and that the French government will not offer a bailout.

Pressure on Air France-KLM AIRF.PA grew on Monday as its shares fell by more than 10 percent after chief executive Jean-Marc Janaillac said he would resign over the rejection of a pay deal by the airline's staff.

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While airlines from Deutsche Lufthansa AG to British Airways - and lately even low-priced specialist Ryanair Holdings Plc - have all had their share of corporate dysfunction brought on by strikes, none has suffered to the extent as Air France.

Air France-KLM's board is set to announce an "interim governance solution" on May 15 following Janaillac's departure.

Until new management plans are in place, Air France executives lack a mandate to continue negotiations with unions, prolonging the dispute.

"KLM might (rightfully) ask why the profits are being generated in the Netherlands but the losses being made in France", they said.

The Air France turmoil has coincided with other strike action in France where rail workers press on with rolling stoppages to protest President Emmanuel Macron's planned overhaul of SNCF, the state-run train operator.

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Air France-KLM shares plummet in aftermath of CEO Janaillac 's resignation