Air France to launch new lower-cost airline after pilot backing

[PARIS] Air France said it will move forward with plans to launch a new lower-cost airline this autumn after the project won approval from the main SNPL pilots'union on Monday.

The plan, dubbed "Boost", is Air France's response to pressure from Gulf carriers. It will operate 10 long-haul and 18 short-haul aircraft at lower costs than its main brand in a bid to restore some routes to profitability and gain new customers.

The chief executive of parent group Air France-KLM told Reuters last month that the new airline would attract not only younger customers on vacation, but also business customers.

The move comes as other traditional carriers launch their own budget, long-haul airlines to meet competition on the north Atlantic from the likes of Norwegian and Wow. Lufthansa offers low-cost, long-haul flights via its Eurowings budget subsidiary while British Airways-parent IAG launched new airline Level this year.

The trade union approved Air France's plans on Monday by a majority of just over 78 per cent. The deal also includes efforts to increase productivity by around 40 million euros (S$62.953 million) annually across the Air France operations, as part of the group's "Trust Together" programme.

The agreement comes just days after cabin crew also agreed a new collective agreement, thus removing two sources of uncertainty for Air France as it seeks to bring costs down and battle competition from the Gulf carriers on one side and budget rivals on the other.

Air France-KLM shares, which have already more than doubled this year in light of improving traffic and revenue trends, were up 2.5 per cent in late session trading.

Air France's head of human resources said the airline aimed to recruit 250 pilots per year over the next three years.

Air France-KLM is due to report second-quarter results on July 28.

REUTERS