Air France-KLM has announced a pay freeze for French staff and cutbacks in its fleet as part of a three-year turnaround plan.
Europe’s largest airline in terms of revenues is underperforming its rivals.
The Franco-Dutch group has pledged to cut its debt by two billion euros by the end of 2014.
The budget to buy new planes will be reduced by over one billion euros and it will defer deliveries of several Airbus and Boeing aircraft including two Airbus A380 superjumbos.
“We needed to take these measures because our debt position and costs per unit were running too high, and because of losses on our domestic and European routes. We do this to avoid getting into trouble later,” said Peter Hartman, chief executive of KLM, the group’s Dutch subsidiary.
Shares in the group rose as investors bet on firm action from Jean-Cyril Spinetta, who was restored as chief executive in addition to his role as chairman last November.
Unions are expected to oppose the plan which calls for a general pay freeze at Air France during 2012 and 2013 combined with “wage moderation” at the Dutch sister airline KLM. A policy of no new hiring will continue.
Air France-KLM turnaround plan unveiled