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French Government To Keep A Close Eye On Air France - Ministry

PARIS -(Dow Jones)- The French government said Friday it will be keeping a close watch on Air France as it struggles to return to profitability, especially regarding its promise not to lay off any employees. The deputy minister for transportation and shipping Frederic Cuvillier summoned the chief executive of Air France, Alexandre de Juniac, for a meeting Thursday to discuss the airline's financial situation. He told him that "he will be particularly attentive in the coming months that the company, which has 53,000 employees, finds ways to carry out its recovery, without resorting to involuntary layoffs," Cuvillier's office said in a statement. Air France, part of the Air France-KLM (AF.FR) group, told employee representatives Thursday that it plans to reduce its headcount as part a broad recovery plan that will include a restructuring of its domestic and regional operations, a reduction in the size of its fleet of aircraft, and a 20% gain in productivity to return to profit. The French carrier has already instituted a wage and hiring freeze, and according to press reports it is likely to announce several thousand job cuts through 2015 at the end of next month, either through voluntary departures or attrition. Meanwhile, a French lawmaker described as "indecent" a EUR400,000 golden handshake for Pierre-Henri Gourgeon, the former Air France-KLM chief executive who was fired last year, at a time when the airline's personnel is threatened with job cuts. He called on Gourgeon to relinquish his claim to the departure bonus. Bernard Carayon, a deputy of the conservative UMP party, said Gourgeon was fired because he was pushing for Air France to buy aircraft made by Boeing Co (BA) instead of planes assembled in France by Boeing rival Airbus, a unit of European Aeronautic Defense & Space Co NV (EAD.FR). Carayon said he had been able to thwart that attempt by organizing a cross-party lobby of 186 French deputies. -By David Pearson, Dow Jones Newswires; +331 4017 1740, david.pearson@dowjones.com

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