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French Pilot Strike Hides Weakness of Once-Feared Unions

Airfrance

By the time Air France-KLM Group pilots ended their 14-day strike this week, they had forced their employer to abandon plans to expand its low-cost unit, disrupted air traffic throughout Europe and cost the company an estimated $350 million.

What they hadn’t done was win their key demand: that France-based pilots at the Transavia subsidiary work under the same contracts they do.

This lack of success is the rule these days rather than the exception in a country legendary for its frequent and visible work stoppages. A train strike over the summer failed to block a restructuring of the state railroads. Strikes didn’t stop ArcelorMittal from shutting steel mills or the government from raising the retirement age in 2010. French unions may be losing their fearsome reputation.

“We’ve seen the unions become more and more divided and have fewer and fewer members,” said Jean-Michel Denis, director of the Center for Study of Labor, a research institute linked to the Labor Ministry. “The unions don’t get results, so their membership goes down, so they get fewer results.”

That the pilots won a semi-victory says more about their pivotal position than it does about the power of French unions, said Bernard Vivier, director of the Higher Institute of Labor in Paris, which studies labor relations for unions and companies.

“The pilots are more than a union, they are a corporation,” Vivier said. “There’s a big difference between a strike by a unified, highly specialized corps of pilots and a diffuse group of workers at a railroad.”

Student Strikes

Strikes — almost always accompanied by street demonstrations — echo throughout modern French history. The general strikes that followed student rebellions in May 1968 almost toppled President Charles de Gaulle. In December 1995 two months of walkouts by transport workers forced President Jacques Chirac to abandon plans to lift the retirement age, limit welfare spending and reduce costs in the state medical system.

These days, with an economy that has barely grown in two years and an unemployment rate of 10.2 percent, victories are rare and union strength is diminishing. The CGT, France’s largest union, had 4 million members in 1948 and has 700,000 now. Union representation in France is far smaller than in Germany, at about 8 percent versus 18 percent.

The eight-day railroad walkout in June began with 28 percent of the workers on strike, a rate that slid to 11.8 percent by the work action’s last day. By contrast, the participation rate in the Air France pilots’ stoppage peaked at 65 percent and never went below 50 percent, the company said. Most days, Air France operated about half its flights.

Revenue Loss

While Air France estimated the cost of the strike at between 15 million euros ($19 million) and 20 million euros a day, that figure was based solely on the impact from revenue loss after subtracting the lower cost of fuel, given fewer flights. Damages paid to passengers who were inconvenienced, or extra costs associated with housing pilots or flight attendants stuck in far-flung destinations, will drive the bill considerably higher.

“The strikers were a tiny category of personnel that were able to completely stop the activity of a company,” said Yan Derocles, an analyst at Oddo Securities in Paris. “And the strike was happening in a country where everything is highly centralized, and you have enormous amount of economic activity that relies on departures from Charles de Gaulle airport.” The airport is located near Paris.

The French pilots’ strike wasn’t supported by Air France unions representing such other professions as cabin crews and ground staff. The strike was an “enormous waste” and a “lose-lose conflict,” the CFDT union, France’s second-largest union, said in a Sept. 29 statement. The CGT, said Sept. 17 that “it doesn’t condemn this strike but neither does it support its ultra-narrow demands.”

Cost-Cutting

The strike was sparked by Chief Executive Officer Alexandre de Juniac’s plan to cut short-haul costs through the expansion of Transavia to better compete with EasyJet Plc and other discount carriers.

In an effort to resolve the labor dispute, Air France dropped plans for a new discount division, Transavia Europe. It would have been separate from the airline’s French and Dutch arms, where Juniac has struggled to reduce costs since taking over as CEO about a year ago.

The SNPL, the largest pilots’ union, said in a Sept. 28 statement it was going back to work “out of a sense of responsibility” even though “we have not reached an acceptable accord.”

The French government, which holds a 16 percent stake in Air France-KLM, backed Juniac’s cost-cutting plan. French Prime Minister Manuel Valls — a Socialist, like President Francois Hollande — often asked the pilots to go back to work, saying the strike “wasn’t understood” by the French public.

‘Square One’

The smaller SPAF union is continuing to stay off the job. “It’s more than strange that a government that claims to be on the left condemns a strike,” said SPAF spokesman Julien Duboz, a first captain on Airbus 320s. “The strike’s been a complete waste because two weeks later we are back to square one, but the fault lies with management. They never entered into serious negotiations.”

Antoine Godier, a Boeing 777 pilot and spokesman for SNPL, the bigger union, said he wouldn’t argue with the idea that unions in France generally have lost clout over the years, though he says that’s partly because of the low level of labor representation in the public and private spheres. In addition, rules changes under former President Nicolas Sarkozy intended to “democratize” the role of union members haven’t been sufficiently phased in, he said.

In aviation, though, a far bigger percentage of the work force is comprised of union members than elsewhere. Of 4,000 pilots at Air France, about 70 percent belong to unions, with four-fifths of them members of SNPL, he said.

Carmaker Wages

The pilots, who earn as much as 200,000 euros a year, contrast with workers at companies such as carmakers Renault SA and PSA Peugeot Citroen, who last year accepted greater flexibility at frozen salaries. Both agreements cut headcount by 17 percent and extended work hours.

“There are many cases at the company level where the unions have agreed to new, much more competitive labor contracts,” said Jean-Francois Ouvrard, director of research at Coe-Rexecode, a Paris-based economic research institute linked to France’s business lobby.

The Socialist-dominated parliament passed a new reorganization of the state railroad company even after a two-week walkout by railroad workers in June snarled the start of the summer holidays.

Petroplus Holdings AG shut its Petit-Couronne refinery in 2013 and Arcelor closed furnaces at Florange in 2012 despite walkouts. Fourteen one-day national strikes in 2010 didn’t stop the government from raising the retirement age by two years. Even the measures that led to the 1995 transit stoppages were approved a few years later.

Unions’ current lack of success in getting results partly stems from the poor state of the economy, said Thomas Breda, a professor at the Paris School of Economics. “It’s hard for a strike to stop a money-losing company from closing a plant,” he said.

(Source: Bloomberg)