Air France-KLM CEO Jean-Marc Janaillac said on Friday he would resign after staff rejected a pay deal, plunging the airline into turmoil amid a wave of strikes at its French brand that has cost the company $359 million.
Janaillac said that more than half of the staff at Air France who cast a ballot voted against the offer of a 7 percent increase over four years. Turnout was high at 80.33 percent.
“I take responsibility for the consequences of this vote and will in the coming days tender my resignation to the boards of Air France and Air France-KLM,” Janaillac told a news conference.
“I hope that my departure will spark a more acute collective awareness,” he added.
Unions announced they would maintain their strike action on May 7 and May 8.
Air France-KLM earlier on Friday reined in its 2018 profit and growth expectations, partly due to the effects of the strikes, and said it wasn’t able to take advantage of a good market environment for European carriers.
Air France needs to cut costs to keep up with leaner rivals in Europe. Dutch sister company KLM, which has cut costs, saw its profits rise in the first quarter, contrasting sharply with losses at Air France.
Flag-carrying rivals British Airways and Lufthansa have already undergone painful cost-cutting in recent years as they battled to compete with the rise of low-cost carriers in Europe and new competition from Gulf carriers.
Air France has lagged behind, with unions hampering efforts.
In a high-stakes move, Janaillac said before the vote that it would be hard for him to stay in the role if the unions pushed back against the salary hike offer.
He was backed by the French government, Air France-KLM’s top shareholder, which has said the dispute is damaging the company. There was no immediate reaction by the French presidency or finance ministry.
Janaillac was appointed CEO of Air France-KLM in June 2016 after his predecessor failed to reform the airline in the face of union resistance.
Liberum analyst Gerald Khoo said ahead of the vote result that a rejection of the offer would suggest that Air France was incapable of being reformed.
“Losing two consecutive CEOs who have taken significantly different approaches to the unions would imply the business is unmanageable,” Khoo said.
