April 26, 2013 / 1:20 PM / 5 years ago

UPDATE 1-French court rejects Peugeot cutbacks challenge

* Union challenge against Peugeot cuts rejected

* Ruling allows cuts to take effect -Peugeot

* Unions vow to appeal decision (Adds company and lawyer comments, details, background)

By Gilles Guillaume

PARIS, April 26 (Reuters) - A French court on Friday rejected a union challenge against PSA Peugeot Citroen’s plans to cut thousands of jobs and close a plant, clearing the way for the restructuring to begin.

The Paris court dismissed a bid to halt the cutbacks, the left-wing CGT union’s lawyer said after the hearing. The decision lifts an earlier suspension of the plan after additional worker consultations ordered by the judge.

“The court rejected our motion which was based on the inadequacy of the restructuring plan,” attorney Marie-Laure Dufresne-Castets said.

Peugeot, the carmaker worst-hit by Europe’s auto market collapse, is struggling to halt losses of up to 200 million euros ($260.12 million)a month by the end of next year and return to profit in 2015.

Under a restructuring plan announced last July, the company is cutting 8,000 domestic jobs and closing its plant in Aulnay-sous-Bois, on the northern outskirts of Paris.

At an earlier hearing, Peugeot was ordered to postpone the cuts until it had extended consultations to workers at Faurecia , its 57 percent-owned auto parts-making business.

Although other legal actions are still pending against Peugeot’s plan, the court decision removes the last significant obstacle to its implementation ahead of a meeting with employee representatives on Monday.

The cutbacks will now begin going into effect “after the upcoming works council meeting”, Peugeot said after the hearing.

A similar challenge from the hard-line SUD union was also dismissed by Friday’s ruling, a lawyer for the grouping said. Both unions said they planned to appeal.

The restruturing plan is already backed by a majority of unions representing 76 percent of Peugeot staff.

Unveiling a further 6.5 percent decline in first-quarter revenues on Wednesday, Peugeot said it planned to seek further savings by negotiating labour concessions in such areas as working time and wage restraint. ($1 = 0.7689 euros) (Additional reporting by Laurence Frost; Writing by Elena Berton; Editing by Christian Plumb)

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