AF Air FranceKLM

PARIS—Air France-KLM's board officially picked Jean-Marc Janaillac, head of bus and train operator Transdev, to replace Chief Executive Alexandre de Juniac, who is due to leave by August after struggling to restructure the ailing airline group.

The board approved a recommendation made by the Nomination and Governance Committee, the Franco-Dutch company said in a statement. The board stressed Mr. Janaillac's experience in the airline business and his handling of dialogue with workers to justify the decision.

Mr. de Juniac is due to step down in late July to become chief executive of the International Air Transport Association, the trade association of the world's airlines.

The move comes as the company's management is in the middle of a delicate negotiation with unions over cost-cutting as it slowly recovers from years of losses following an improving environment for the air transportation business.

At Transdev, Mr. Janaillac, 63, has led difficult negotiation with unions, notably with the Marseille-based shipping company SNCM. He held a senior position at Air France in the late 1980s and was a top executive at airline AOM in the late 1990s. He also has worked in the past in the Netherlands.

Mr. Janaillac also has very good political connections as he studied at the prestigious Ecole Nationale d'Administration in France along with French President Franç ois Hollande, Finance Minister Michel Sapin and Environment Minister Segolene Royal.

Air France's restructuring program—launched by Mr. de Juniac in September 2014—faces uncertainty after clashes with unions that climaxed in October 2015 when a mob accosted two of the company's top officials and tore their shirts in front of TV cameras.

The plan is aimed at making the airline group more cost competitive to better battle budget airline competitors such as Ryanair Holdings PLC and easyJet PLC in Europe, and long-haul competition from Emirates Airline and other rapidly expanding Middle East carriers.

Air France has threatened to slash 2,900 jobs and close long-haul routes unless it can gain concessions from pilots and other employees. Talks between the airline and union about job cuts are continuing.

Since taking the top post at the French arm of Air France-KLM in 2011, Mr. de Juniac implemented cost reduction plans and aimed to refocus the company by developing its low-cost unit, Transavia. He took over as CEO of the entire group in 2013.

Frederic Gagey, the CEO of the group's Air France arm, will remain at his job, the official said. Mr. Gagey was initially mentioned as a possible replacement for Mr. de Juniac.

Write to Inti Landauro at inti.landauro@wsj.com

(END) Dow Jones Newswires

May 01, 2016 21:55 ET (01:55 GMT)

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