URL https://www.reuters.com/article/us-air-france-klm-stake/minister-to-air-france-klm-boss-fix-airline-before-talk-of-stake-sale-idUSKCN1M70EP

DATE/ AUTHOR 2018-09-27 09:29:09+00:00	AUTHORS: Richard Lough, Min Read

H Minister to Air France-KLM boss: Fix airline before talk of stake sale

S1 PARIS (Reuters) - France has no plans for now to sell its 14 percent stake in Air France-KLM (AIRF.PA), Finance Minister Bruno Le Maire said on Thursday, pressing the group’s new chief executive to focus on increasing competitiveness.

S2 FILE PHOTO: French Finance Minister Bruno Le Maire attends a news conference at the Bercy Finance Ministry in Paris, France, August 30, 2018.
S3 REUTERS/Christian Hartmann/File Photo

S4 Le Maire was reacting to a warning from the group’s new Canadian boss, Benjamin Smith, to Air France’s labour unions that the government was prepared to offload its shares and they should not rely on the state to bail them out.

S5 Smith, who took over the group last week, faces the unenviable task of having to overcome union resistance to reduce the French unit’s swollen cost base while keeping increasingly frustrated Dutch staff on side.

S6 A wave of strikes at Air France this spring cost the group some 350 million euros ($410 million) and led to the ouster of Smith’s predecessor.

S7 “Today the priority is to turn around Air France,” Le Maire told franceinfo.
S8 “Selling off the state’s stake in Air France is not part of Benjamin Smith’s action plan.
S9 It is not an option on the table today.”

S10 Shares in Air France KLM rose 1.6 percent, although the stock remains down by nearly 40 percent so far in 2018.

S11 In an interview published on Thursday, Smith told the Financial Times that the French government should not and would not bail out Air France to shield it from competition, even if there were some in the company that believed the state’s holding offered them protection.

S12 Le Maire himself warned Air France staff in May that the government would not come to the airline’s rescue.

S13 The French state is the largest shareholder in Air France-KLM.
S14 What President Emmanuel Macron does with the stake will be a test of the former investment banker’s resolve to lighten the state’s touch on the economy.

S15 Le Maire said it made no sense for the state to sell down its stake in Air France while the airline is attempting to make tough reforms and at a time its share price is suffering.

S16 “The state would be a poor manager (of its holdings) if it started selling its shares in a company that is not in good shape,” he said.

S17 Air France-KLM’s shares have been hit this year, mainly due to the strikes waged by French unions seeking improved pay and working conditions.

S18 Delta Airlines (DAL.N) and China Eastern Airlines (600115.SS) each hold an 8.8 percent stake in the group.

