That Air France-KLM can produce better financial results after one quarter than Lufthansa and IAG is already unusual. But to see Lufthansa and British Airways plunged into chaos by mid-summer strikes, while Air France is the model of social peace, is even more surprising.
Of all the major European companies, Air France is the only company that has not experienced a work stoppage in recent weeks, with the exception of a three-day strike at its low-cost subsidiary Transavia, which was not an Air job. Workers in France. Even Ryanair is not spared. A stability that largely explains the group’s good performance and that is the result of a set of factors.
Make the summer season a success
The first is probably the sense of responsibility of Air France employees, having benefited from state aid without equivalent in Europe. Part of this aid – about 40% – and other deferred charges still have to be paid, including the essential requirement to make the summer season a success, which traditionally generates huge profits.
But the consolidation has also been due to some risky choices by general manager Ben Smith. From maintaining a higher level of activity than competitors during the crisis, but reducing limited staff as much as possible and conserving core competencies and aircraft purchases with taxpayer support.
Air France bet on takeovers earlier than others, hesitating to rehire earlier in the year, when takeover prospects still seemed unclear. This has enabled it to cope with the rebound in demand and avoid the problem of global shortages, even if the company is far from regaining optimal performance.
Special attention for pilots
Added to this volunteerism is a special attention given to employees of a particularly strategic department: the pilots of Air France, without whose support any strategy would fail. Over the past two years, rather than waiting for the pandemic to end, Air France has hired nearly 700 pilots, including 400 in 2022. This not only accelerated Transavia’s growth, but also enabled older pilots to see their careers and their pay progress.
Added to this virtuous dynamic was, for Air France’s long-haul pilots, a nice icing on the cake: this year’s application of Article 81A of the General Tax Code, which will lead to significant savings. This was an old demand of the pilots’ union, which found favor in Bercy’s eyes under the combined action of the management of Air France and SNPL AF-TO.
A tax is icing on the cake
Thanks to this device, originally designed for seafarers, those who spend at least 20 days abroad can now reduce their taxable income at various rates, up to 28.6%. What conveniently replaces the deduction of actual expenses and recovers, depending on the case, the equivalent of a good month of additional salary.
This may partly explain the low sensitivity of Air France pilots to the problems of inflation and declining affordability. But only partially, because this tax deduction benefits only long-haul pilots and not short- and medium-haul pilots. So SNPL AF-TO doesn’t want to be satisfied and has already called for wage negotiations to begin at the start of the school year with a view to getting a general increase in the salaries of Air France pilots. And Transavia is up to inflation.
They are not the only ones demonstrated by the very popular strike by cabin crew on Transavia France in July. And other classes of workers can also enter the dance after the summer reunion.