Air France-KLM’s management on Thursday called for drastic cost-cutting despite the airline posting its largest quarterly net profit in five years as a result of lower fuel prices, reports The Wall Street Journal.
Air France-KLM reported a sharp rise in third-quarter net profit to €480 million ($533 million), compared with a revised €86 million profit in the same period last year. The airline’s bottom line was boosted by some €500 million in cost savings from lower jet-fuel prices as well as a weak comparative quarter, which was hit by a costly pilots strike, chief financial officer Pierre François Riolacci said.
However, strong profit growth is likely to complicate the company’s effort to convince restive unions in France that the carrier needs to undertake sharp cost cuts. Management says the cuts are necessary for it to compete with short-haul budget carriers and Gulf airlines on the more expensive long-haul flights.
Talks between Air France’s management and unions turned sour early this month when a group of company employees accosted two company executives and tore off their shirts. Workers turned against the company’s negotiators when they announced a plan to cut 2,900 jobs.
The profit also thrusts Air France-KLM into the unusual position of arguing that its results are actually weaker than they appear.