Air France plans new 2,800 job cull

Updated: 
Brutal competition from the likes of Ryanair and Easyjet, not to mention other operators like Norwegian and even Asian and Middle Eastern competition, has seen Air France swing the axe at its workforce: the Paris-based operator is to slash a further 2,800 jobs as it struggles to fight costs and keep in the air.

Is the latest jobs rout enough for France's national flag carrier?

Profit turbulence

Air France-KLM - the Dutch and French carriers merged in 2004 - chopped more than 5,000 jobs earlier this year, claiming also that it had pushed through €100m improvements in operating profits for the first half of the year. Clearly that effort has not been enough.

The latest jobs cull saw Air France's share price knocked back sharply to well under €7, with the contamination also extending to British Airways; IAG's share price plunged almost 5% at one point, though it has now recovered to 326p (though in late August it had dipped to 283p).

Air France is now cutting back on unprofitable routes internally. Typical of the new breed of competition is Norwegian: you don't normally associate super-pricey, wealthy Norway with cheap seats. But Norwegian is an adept mover, basing itself across Eastern Europe to lower costs and increasingly flying to increasingly wealthier Asian hubs, not to mention carrying Brits to Spain.

Thirsty, heavy

Air France, in comparison, appears something of a dinosaur, facing higher wage costs than much of the competition while pummelled by a weak domestic economy and, in some areas, an ageing, thirsty fleet of carriers (though plans are afoot to speed up the retirement of some of its 747s).

The airline industry is a volume business. There is relentless pressure on passenger load, hence the emphasis on alliances (British Airways and Iberia, Air France-KLM, etc) in order to gain leverage and keep costs down. It's all about efficiencies and, increasingly, "extras" (think Ryanair).

Meanwhile the French airline is likely to post another net loss this year, its sixth consecutive annual loss. The numbers continue to look against the French operator. Since 2006 it's thought the low-cost carriers have increased passenger numbers by +12% every year. In contrast, the less nimble traditional competition have barely managed +2%.

Safest Jobs in Britain Revealed

Safest Jobs in Britain Revealed