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Stocks of Air France-KLM slides down: warnings from Government

Stocks of Air France-KLM slides down: warnings from Government

Paris: Air France shares went into a tailspin on the Paris stock exchange Monday after the strike-hit company's CEO resigned and the government seemed to worry about the carrier's very chances of survival.

On Friday Air France-KLM's CEO stopped over the emergency.

Despite the French state owning 14.3% of the Air France-KLM parent group, the loss-making airline would not be bailed out, he said.

Shares were down almost 10 per cent as investors continued to lose faith in the airline, which has been battered by three months' worth of strikes over pay and working conditions.

Janaillac warned a year ago that volatile fuel prices and geopolitical risks could threaten the company's turnaround, but didn't appear to predict the heavy toll that the strikes would take.

Had it been agreed, the pay deal which was put to Air France staff on April 20 would have given them a 7% pay increase over four years including a 2% raise in 2018.

The group's share price has halved this year as it faces increasing competition from low-priced rivals and deep-pocketed Middle Eastern airlines, as well as the prospect of a sustained higher oil price.

Air France said flights for May 7, also a strike day, were operating as forecast.

The government's response is seen as a test of labour reforms launched by French President Emmanuel Macron.

Janaillac will formally resign at a Board of Directors' meeting on May 9, the company said, adding that "it will be their responsibility to take the appropriate measures to ensure the continuity of the group and Air France during the transition period".

A May 4 electronic vote resulted in a "no" vote to the plan by a majority of Air France staff.

Labor unions have scheduled more strikes, leading the French airline to warn that it would cancel about 15% of its flights on Monday.

France's economy minister on Sunday warned that the survival of Air France was now in the balance and could "disappear".

"I will not explain to the French that we will.absorb the losses of Air France while Air France does not make the necessary competitive efforts to be at the same level as its major European competitor".

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