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Bankrupt Aigle Azur's unions seek more time for Air France talks

Bankrupt Aigle Azur's unions seek more time for Air France talks
FILE PHOTO: An Airbus A320-200 aircraft, operated by Aigle Azur, lands at Orly Airport near Paris, France, September 6, 2019. REUTERS/Benoit Tessier -
Benoit Tessier(Reuters)
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PARIS (Reuters) – Staff representatives at bankrupt French airline Aigle Azur have asked for more time to discuss a takeover by Air France-KLM <AIRF.PA> at a court hearing on Monday, as the field of potential buyers narrowed, the CFDT union said.

Air France, which submitted a bid last week, has agreed to combine its offer with Air Caraibes parent Dubreuil group, two sources told Reuters, confirming French media reports.

Air France wants to buy Aigle Azur’s medium-haul business serving Algeria and the surrounding region, along with valuable take-off and landing slots at Paris Orly. Air Caraibes has bid for the long-haul operations to destinations including Brazil.

The CFDT and CFTC unions together representing a majority of Aigle Azur’s French staff also offered to renegotiate contract conditions in order to avoid a liquidation.

Air France declined to comment. A spokeswoman for rival bidder easyJet <EZJ.L> was not immediately available. A third offer led by a former head of Air France’s Hop! unit has been withdrawn, people with knowledge of the process said.

Higher fuel costs and stiffer low-cost competition have led to a recent wave of bankruptcies among smaller European airlines including Air Berlin, Germania, British-based Monarch, Latvia’s Primera Air and Swiss SkyWork.

Privately held Aigle Azur was placed under bankruptcy protection on Sept. 2 and halted operations days later, leaving 19,000 passengers stranded.

Shares in Air France-KLM were 4.1% lower at 1011 GMT on Monday. The stock had already fallen sharply on last week’s offer confirmation, amid concern about pressure from the French government, which owns 14.3% of the Franco-Dutch airline group.

But Air France has balked at Aigle Azur’s current pilot and cabin crew contracts. To reset their seniority and other conditions, its bid requires the carrier’s liquidation, at some risk of opening the Orly slots to rival bidders.

Voicing support for an Air France-Air Caraibes bid, the unions offered on Monday to narrow the cost gap with a labour deal “based on the Air France job offers” to avoid liquidation.

The bankruptcy process underway may leave little negotiating time, with any extension thought unlikely to exceed a few days.

The court hearing in the Paris suburb of Evry was to evaluate the rival offers on Monday, and may decide whether to place Aigle Azur in liquidation or to grant more time.

(Reporting by Laurence Frost; editing by David Evans)

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