June 30, 2020 / 1:10 PM / 5 days ago

Air France plans to cut 6,500 jobs by 2022: sources

PARIS (Reuters) - Air France (AIRF.PA) aims to present a plan to trade unions to cut just over 6,500 jobs over the next two years, three sources familiar with the matter said on Tuesday, as the airline grapples with the coronavirus crisis.

FILE PHOTO: Air France A380 Airbus and airplanes sit on the tarmac at the site of French aircraft storage and recycling company Tarmac Aerosave in Tarbes following the coronavirus disease (COVID-19) outbreak in France, June 19, 2020. Picture taken June 19, 2020. REUTERS/Stephane Mahe/File Photo

France’s flagship airline, part of the Air France-KLM group, is cutting capacity and exiting loss-making domestic routes as the pandemic hits international travel.

On top of the 6.500 staff cuts - roughly representing just under 15% of employees such as pilots, ground staff and flight attendants - an additional 1,000 layoffs would be made at Air France’s “HOP!” airline, one of the three sources said.

BFM TV and Agence France Presse earlier reported 7,500 looming job losses.

Air France declined to comment on its labour plans. It is expected to hold talks with unions on Friday.

Some 3,500 of the job cuts would come from natural attrition - such as retirements and not replacing leavers, two of the sources said.

Under CEO Ben Smith, who joined from Air Canada in 2018, Air France-KLM has sought to cut costs, improve French labour relations and overcome governance squabbles between France and the Netherlands, which each own close to 14% of the group.

Now saddled with 10.4 billion euros in government bailout debt to cope with the pandemic - including last week’s 3.4 billion Dutch contribution - Air France-KLM must now step up restructuring to stay competitive and independent.

Rivals have moved faster to announce job cuts, with British Airways (ICAG.L) planning to axe 12,000 positions and easyJet (EZJ.L) 4,500, amounting to 30% of their respective workforces.

Lufthansa Group (LHAG.DE) is also cutting the equivalent of 22,000 full-time positions, or 16%.

But a mature staff including many close to retirement should help Air France meet voluntary redundancy targets, Smith told Reuters as restructuring talks opened in May.

Ground-based staff are expected to bear the brunt of job cuts, the sources said.

Reporting by Maya Nikolaeva, Caroline Pailliez, and Sarah White, editing by Louise Heavens and Mark Potter

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