January 15, 2016 / 7:43 PM / 4 years ago

UPDATE 1-Air France drops restructuring plan with forced job cuts

(Recasts after company announcement, conference call)

By Cyril Altmeyer

PARIS, Jan 15 (Reuters) - Air France has dropped a restructuring plan with forced job cuts that triggered protests last year in favour of a new strategy that the airline hopes will see a return to growth next year.

The French division of Air France-KLM said the new plan would see an expansion of the airline’s long-haul network by 2-3 percent per year from 2017 to 2020 and the continued growth of its low-cost Transavia subsidiary.

Buoyed by the slide in oil prices, Air France said last week it would post an operating profit in 2015, the first year it will have done so since 2008.

“Air France’s recovery is continuing and the current buoyant economic situation allows us to offer a return to growth as from 2017,” Air France Chief Executive Frederic Gagey said.

Three months ago, Air France’s human resources director had to flee an angry mob of workers with his clothes in shreds after the airline threatened to cut jobs and flights when talks with pilots over productivity collapsed.

Air France said on Friday it had suggested relaunching talks with pilot and cabin crew unions. It said negotiations with ground staff had just ended and would help the airline avoid any forced job cuts between now and June 2018.

“Today we have the chance to make gradual progress and carry it out in ... a more realistic and meaningful way,” said Gilles Gateau, a former aide to Socialist Prime Minister Manuel Valls who was appointed human resources director this month.

A demand from the airline for 17 percent productivity gains by the end of 2017 was withdrawn with no immediate new target.

Union reaction was mixed.

“Things are going more gently because economic conditions allow it,” said Beatrice Lestic, head of the CFDT union at Air France. “Things had to stop. We were in a vicious circle.”

Others remained wary after three years of voluntary redundancies and pay freezes.

“What a disappointment. You get the impression the management has reopened divisions between flying and ground staff,” said Didier Fauverte of the CGT union.

Air France shares ended 1.8 percent lower in line with the broader market.

Air France said ground crew were being offered a guarantee of no forced job cuts until mid-2018, coupled with a voluntary redundancy plan running to April 2017.

Pilots, who held a 15-day strike in September 2014, were offered talks on career advancement and the possibility of some hiring from 2017. Gateau urged pilots to enter what he termed “real” negotiations.

With a March deadline looming for fixing training for 2017, any postponement would mean a one-year delay in the introduction the Boeing 787.

Air France plans to increase its long-haul fleet from 104 jets in 2017 to 107 in 2019, restoring levels seen in 2014, and then increasing it to 109 jets in 2020.

It said it would add 16 already-ordered Airbus A350 and Boeing 787 jets by 2020. Transavia France, which flies Boeing 737s, would increase its fleet to 40 jets by 2020 from 26 this year. (Additional reporting by Tim Hepher; editing by Bate Felix and David Clarke)

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