Job losses planned at Air Lib

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Air Lib, France's second-largest airline, is in financial difficulties in late 2002 and management has announced a rescue plan involving 500 job losses, to trade union opposition. Despite a decision by the Ministry of Transport to extend the company's operating licence and to defer debt repayment to January 2003, concerns remain over the company's future as a viable business.

In addition to huge losses of EUR 120 million in 2001 and a forecast EUR 60 million in 2002, Air Lib, the airline created out of the recent merger of AOM and Air Liberté (FR0108160F), has racked up significant debts with state-run agencies (unpaid airport taxes and social security contributions). Faced with these recurrent problems, France’s second-largest airline has decided to redeploy its long-haul fleet to African destinations, which are thought to be more viable than French overseas départements. Indeed, the latter routes are responsible for most of the company’s losses. The Air Lib chair, Jean-Charles Corbet, claims that flights to overseas départements account for EUR 102 million of the company's losses of EUR 130 million. In addition, since January 2002, Air Lib has launched new routes; first to Algeria (two destinations) then Libya, Italy, Portugal and Cuba.

After threatening to make 1,300 employees redundant in the event of Air Lib dropping its long-haul routes, Mr Corbet tabled a rescue package, which was turned down. Consequently, he was asked to rework the plan in an attempt to obtain an extension of an EUR 30.5 million loan agreed by the previous government. The current Minister of Transport, Gilles de Robien, is now faced with the task of convincing the European Commission that this is not distortion of competition but merely a restructuring loan granted in January 2002.

It was against this backdrop that the board of Air Lib called on its staff to make a special 'effort on pay and conditions' at an extraordinary works council meeting, at which a new rescue package was presented. This move caused concern among trade unions. The proposed restructuring plan provides for 500 job losses and is forecast to cost EUR 50 million. Paul Fourier of the General Confederation of Labour (Confédération générale du travail, CGT) stated that 'this is a terrible blow to employees, who have already experienced one redundancy plan in July 2001.' The French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) called the move 'scandalous'. The plan includes ditching plans for new routes to Africa, and cutting services to the Caribbean and to some regions in metropolitan France.

On 7 November 2002, the Air Lib chief executive announced that the airline had a new shareholder. This move, tabled at the Créteil Commercial Court (tribunal de commerce), is designed to enable the company to avoid its regular flirtations with bankruptcy, but at a severe cost to jobs since the plan to axe 500 jobs involves 400 straight redundancies. In the view of Gilles Nicoli of CFDT, such a plan is unacceptable. He contends that none of these jobs would need to be lost if Lib Air were to refocus on African routes, where, since the demise of Air Afrique, Air France has had a near monopoly. Also at stake are Air Lib’s flight slots, which have caught the eager eye of the airline’s competitors.

The Minister of Transport is keen for Air Lib to establish effective partnerships with other companies, but has stressed that the state cannot prop up a private company.

The identity of the new main equity investor was announced at an extraordinary works council meeting held on 13 November 2002. The chair and chief executive of the Dutch group Imca, Erik De Vlieger, is to take a 50% stake in Air Lib with the aim of creating Europe’s third largest cut-price airline. Mr Fourier of CGT stated that Mr De Vlieger still has to prove that he has adequate financial resources and backing. Uncertainty remains as to the identity of potential investors for the long-haul network. It seems likely that Air Lib will be divided into two separate entities. The first, operating as a cut-price service in France and the rest of Europe, would be likely to return to profit by the end of the year. The second would take over routes to overseas départements and other long-haul destinations.

The Ministry of Transport finally opted to extend Air Lib’s operating licence until 31 January 2003 and to postpone repayment of debts owed to the state and state-run agencies until 9 January 2003. Nevertheless employees remain fearful for their future and trade unions do not intend to lower their guard, since, according to J-C Bandler of the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC) , management is 'lobbying for a move to a low-cost payroll'.