August 11, 2018 / 10:22 PM / in 9 days

Next Air France-KLM boss must not surrender French interests - director

PARIS (Reuters) - The next chief executive of Air-France-KLM (AIRF.PA) must not be beholden to external interests, said a senior French pilot on the group’s board of directors, criticising the possible choice of Air Canada’s chief operating officer as preferred candidate.

FILE PHOTO: The Air France-KLM company logo is seen during the company's half-year results in Paris, France, August 1, 2018. REUTERS/Benoit Tessier

Le Monde this week reported that Air France-KLM’s nominations committee had picked Canadian Benjamin Smith as its top candidate to head the airline at a time the French brand, Air France, is struggling to cut costs amid union opposition.

The group has not denied Smith is a candidate, saying only that no decision has been made yet. Air Canada (AC.TO) has made no comment.

“It might be useful to say what Air France does not need: enough with candidates who are ambassadors for external interests,” Paul Farges, a board director representing employee shareholders, wrote in Sunday’s Journal du Dimanche newspaper.

Farges’ comments highlight the opposition among Air France staff to any new chief who might ride roughshod over their demands, in particular over higher pay, and focus on cost-cutting rather than restoring the Franco-Dutch group’s reputation as a leading aviation player.

The French state is the biggest shareholder in Air France-KLM with a stake of about 14 percent. Delta Airlines (DAL.N) and China Eastern Airlines (600115.SS) each hold 8.8 percent.

Senior French officials say President Emmanuel Macron is open to considering a non-French national to lead the group for the first time. The appointment is seen as a test of Macron’s resolve for the state to take a lighter touch on the economy.

Referring to the potential pick of a North American boss, Farges wrote: “Would France not be renouncing its air sovereignty at a time each country is bitterly defending the economic interests of its companies?”

Air-France-KLM has been hunting for a CEO since the abrupt departure three months ago of Jean-Marc Janaillac, who quit after pilots led a revolt against a pay offer aimed at ending costly strikes.

Air France needs to cut costs, as its sister brand has, to keep up with leaner rivals in Europe including British Airways (ICAG.L) and Lufthansa (LHAG.DE) and compete with the rise of low-cost carriers and Gulf carriers.

Farges said Air France workers were not to blame for the challenges facing the unit.

“Air France’s difficulties this summer are not related to a failure of employees, but to the attrition of the fleet at a time when the growth of the market requires increasing the volume of supply and staff,” he said.

An eventual vote on a new CEO will go to the 18-strong board of directors.

Reporting by Richard Lough; Editing by Hugh Lawson

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