France urges pilots facing new job cuts to back reforms

By Pascale Denis and Dominique Vidalon

PARIS (Reuters) - France's Socialist government stepped up the pressure on Air France unions on Friday saying the nation's flag carrier must cut costs to survive and pilots should negotiate a deal to boost productivity.

Economy Minister Emmanuel Macron said the airline, part of Franco-Dutch group Air France-KLM, had no choice but to tighten its belt further because of the modernisation already well under way at its rivals.

"Air France must carry out reforms," Macron told reporters after meeting Air France-KLM Chief Executive Alexandre de Juniac, adding that "the door to negotiations remains open".

Europe's second largest network carrier is at loggerheads with its main pilots union, the SNPL, for the second time in a year as it seeks to adjust to pressure from low-cost competition in Europe and Middle East long-haul carriers.

After failing to win pilot approval by the end of September for productivity plans supported by the bulk of its 64,000 staff, Air France is preparing to outline a "Plan B" to unions at a meeting on Monday.

De Juniac said the plan would include "significant" job cuts and Macron said they would be "tougher" than previous proposals.

A union source said de Juniac had told the board, which includes labour representatives, the airline was prepared to cut 2,900 jobs as a result of the failure to reach a deal with pilots over its "Perform 2020" restructuring plan.

That would equate to 4.9 percent of the workforce of Air France, or 3.1 percent of the entire Franco-Dutch company formed from the merger of Air France and KLM in 2004 and in which the French government owns 17.6 percent.

"MAKE AN EFFORT"

The dispute with the pilots has been rumbling for months. In September last year, a two-week pilots' strike cost Air France an estimated 500 million euros.

After Wednesday's deadline expired with no deal, Air France-KLM said it would cut back operations in the next two years to "guarantee a long-term future" and French Prime Minister Manuel Valls urged pilots to "make an effort".

Philippe Evain, head of SNPL's Air France branch, said it was ready to make new offers to management: "Yes we are ready to make new proposals. We are always open to discussions."

Evain would not say if new talks would take place over the weekend, ahead of the workers' committee meeting on Monday.

An Air France spokeswoman said no new talks were scheduled.

Les Echos newspaper said the so-called attrition proposals, or Plan B, also called for deferring deliveries of four out of 13 Boeing 787 Dreamliners Air France has ordered.

Other French media said Air France would ground up to 14 long-haul jets and close five loss-making routes.

Shares in Air France-KLM pared back earlier gains and were up 0.8 percent in line with a barely positive European market.

Three French trade unions - the CGT, FO and UNSA - have also called on Air France ground staff to hold a strike on Oct. 5 to protest against possible job cuts.

(Additional reporting by Dominique Vidalon, Julien Ponthus, Emmanuel Jarry and Gilles Guillaume; writing by Tim Hepher; editing by Greg Mahlich and David Clarke)