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Air France crippled as pilots extend strike against budget unit

The pilots' action hasn't exactly endeared them to other Air France staff, who fear losing their jobs if the company continues to lose money.STEPHANE DE SAKUTIN/AFP--Getty Images

It’s this kind of thing that European Central Bank President Mario Draghi is going on about when he’s droning on about the need for structural reforms.

It’s also the kind of thing that is exposing the gulf between the French government’s rhetoric on revitalizing its economy, and the reality.

Air France’s pilots’ strike dragged on into its 11th day Wednesday amid confusion over whether or not the airline had dropped its plans to expand the low-cost budget airline Transavia Europe, a move that pilots fear will lead to them being replaced by cheaper, mostly likely foreign, substitutes.

Transport secretary Alain Vidalies told national radio that the strike, which has cost the airline between €150-200 million ($192-$256 million) was over, because the management had “abandoned” the plan. But within minutes, Air France head Frédéric Gagey was on a rival station saying “Mais non,” and insisting that they had only agreed to suspend it for three months to make time for a more peaceful solution.

Transavia Europe was Air France-KLM’s belated response to the march of low-cost airlines such as Ryanair and EasyJet, concrete expressions of the modern world’s habit of finding ways around the high legacy costs of the old national carriers. (Similar issues have also driven pilots at Germany’s Lufthansa to strike three times in the last year.)

Air France’s plane captains can earn over 20% more than Transavia’s and, more importantly, they get generous company pensions that they don’t have to pay into at all. Also, they only spend 630 hours a year actually flying, compared to 700 hours at Transavia–and up to 800 or more for Ryanair and EasyJet.

No surprise then, that over 60% of pilots have joined the strike, although the company was still managing to run nearly half of its flights Wednesday.

The group, which combines Air France with the Dutch national carrier KLM, had hoped to make a profit before interest, depreciation and taxes of €2.5 billion this year, but has already cut that forecast after a weak first half and the strike will inevitably force it to cut the forecast again.

Both management and Vidalies warned Wednesday that if the strike goes on any longer, it would threaten the company’s very existence.

“No airline is immortal, and that includes Air France,” group chief executive Alexandre de Juniac said.