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New Air France-KLM boss wins deals on pilot pay, integration

Reuters
FILE PHOTO: Pieter Elbers, President and Chief Executive Officer of KLM, poses before a news conference in Paris, France, July 24, 2015. REUTERS/Charles Platiau/File Photo (Reuters)

PARIS (Reuters) - The board of Air France-KLM agreed to reappoint the head of its KLM division, the Franco-Dutch airline group said, resolving a standoff over new group CEO Ben Smith's plans for closer integration of the two carriers.

In a separate advance for Smith, who joined Air France-KLM from Air Canada in September, the group also signed a pay deal with its French pilots on Tuesday, drawing a line under a labour dispute that blighted operations last year.

Smith has been pushing for more concerted decision-making between the two brands as well as his own seat on the KLM board, but had encountered resistance from the Dutch carrier's workforce and CEO Pieter Elbers.

Concerns about the possible departure of Elbers after his KLM contract expires in April led to a show of public support by its employees last week, as well as talks between Smith and Dutch ministers.

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Besides the Dutchman's reappointment, Air France-KLM said its group board had unanimously approved steps to "simply key group operational processes" in fleet and networks, commercial and alliance strategy, human resources and digital management.

Decisions in those areas will now be taken at group level, Air France-KLM said. Elbers and his Air France counterpart, Anne Rigail, were also appointed as deputy group CEOs.

"We are convinced that Benjamin Smith and his team, with the renewal of Pieter Elbers, will drive further growth at Air France-KLM," group Chairman Anne-Marie Couderc said in the statement.

On Wednesday, Air France-KLM is due to publish full-year results for 2018, when a series of French strikes wiped 335 million euros (291 million pounds) off earnings.

Under their new pay deal, Air France pilots will get a 4.3 percent raise in return for concessions including more flexibility on leave and the sharing of routes with KLM. The deal was signed by the dominant SNPL pilots union after receiving 85 percent support in a ballot.

(Reporting by GV De Clercq and Laurence Frost; Editing by Mark Heinrich)