Air France weighs Joon closure as new CEO seeks labour deals

PARIS: Air France-KLM is mulling the closure of Joon, its newest airline brand, company sources said, in an about-face that could help new boss Ben Smith address the chronic under-performance of the main Air France business.
The discussion about scrapping Joon, which has not been decided, may be a sign of the Canadian chief executive’s determination to tackle weak Air France profitability head-on rather than mitigate it with lower-cost secondary offerings, as many of his predecessors have tried and failed to do. The new CEO “has made clear he doesn’t understand the positioning or identity of Joon,” one Air France source said. “It’s a question he’s raised internally, several times.”
An Air France-KLM spokeswoman said “no decision has been made” on the future of Joon, when contacted by Reuters. She declined further comment.
Smith, hired in August to restore peace and prosperity to the Franco-Dutch group after devastating strikes that led to his predecessor’s resignation, has said Air France must narrow the profitability gap with its more efficient KLM stablemate. The Dutch carrier recorded an 8.8 per cent profit margin last year, more than double Air France’s 3.7 per cent margin.
The former Air Canada second-in-command is now urging Air France pilots to relinquish some perks if they want more pay rises, two people familiar with the matter said. That may include giving up downtown hotels and sleeping at the airport on long-haul layovers.
Layover accommodation is just one aspect of the complex accords now up for renegotiation with pilots’ unions — who are pressing for a 4.7 per cent pay increase in addition to the 4 per cent company-wide raise negotiated last month to offset real-income erosion during earlier pay freezes. — Reuters