French government rules out selling Air France-KLM stake

The French government’s priority is “the recovery” of the French-Dutch operator, which has suffered months of costly strikes by staff in France over pay, finance minister Bruno Le Maire said.
Updated 27 September 2018

French government rules out selling Air France-KLM stake

  • ‘Ending the participation of the French state in Air France is not part of Ben Smith’s roadmap’
  • Fifteen days of strikes by staff seeking higher pay have led to waves of flight disruptions, costing the company €335 million

PARIS: French Finance minister Bruno Le Maire on Thursday ruled out selling the government’s minority stake in Air France-KLM, saying the priority was to turn around the troubled airline group.
“The state would be a very bad manager if it started selling its stakes in a business which is not in the best shape,” Le Maire told France Info radio.
The government’s priority is “the recovery” of the French-Dutch operator, which has suffered months of costly strikes by staff in France over pay, he added.
“Ending the participation of the French state in Air France is not part of Ben Smith’s roadmap,” Le Maire said, referring to the airline’s new Canadian CEO.
The Financial Times had published an interview with Smith earlier Thursday reporting that he had told the paper the government was prepared to dump its 14 percent stake.
Even though “there are some people in Air France that believe that this is something they can have as an insurance,” the government “has recently made clear that this is not a good assumption,” the paper quoted him as saying.
But an Air France source said that Smith had “never said the state was ready to sell its stake.”
“It was based on a misunderstanding,” the source said.
“In responding to a question from an FT journalist, (Smith) indicated that this could happen at the right moment,” the source said of a state sale.
In another interview published Thursday with French magazine Paris Match, Smith was quoted as calling for more support from the French state, not less.
“If the French state wants a powerful industry with positive consequences, notably job creation, it has to help our sector revitalize,” he said.
Such support would help Air France-KLM compete with Gulf operators like Emirates, he said, adding that the airline enjoyed “massive support” from UAE authorities.
Smith, who was named the first non-French boss of France’s former flag carrier on August 16 and started his job last week, has had a rocky arrival at the airline.
The airline’s powerful unions strongly opposed his appointment, saying it was “inconceivable” that Air France “fall into the hands of a foreign executive.”
As they push for higher wages for pilots, stewards and ground staff, the unions have also criticized Smith’s pay package, which could reach as high as €4.25 million if performance targets are met.
Smith pledged last week to invest half of his fixed salary of 900,000 euros in Air France stock as a gauge of his “confidence” in returning the airline to a more solid footing.
Fifteen days of strikes by staff seeking higher pay have led to waves of flight disruptions, costing the company €335 million ($392 million).
Smith is due to meet with unions on Monday to try to thrash out an agreement.
His predecessor, Jean-Marc Janaillac, resigned in May after gambling his job on reaching a deal with the unions.
“We will set off on a path together to reach an agreement, even if that might take a year,” Smith told Paris Match.
“Time spent on internal disputes is wasted time that could be spent fighting our competitors,” he added.

World leaders prepare for Davos amid gloomy forecasts

Klaus Schwab, founder and executive chairman of the World Economic Forum. (AFP)
Updated 32 min ago

World leaders prepare for Davos amid gloomy forecasts

  • Delegates to annual forum to include presidents of Iraq and Afghanistan

DUBAI: World leaders are preparing to head to the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, amid the riskiest global backdrop in years, according to a report from the event organizer itself.

As the WEF announced the names of some of the 3,000 participants set to attend the meeting and details of the four-day agenda, it also published a gloomy outlook on international politics, economics, the environment and technology. 

Rising geopolitical and geo-economic tensions are the most urgent risks in 2019, with 90 percent of experts surveyed expecting further economic confrontation between major powers, according to the WEF’s annual Global Risks Report.

“The world’s ability to foster collective action in the face of urgent major crises has reached crisis levels, with worsening international relations hindering action across a growing array of serious challenges. Meanwhile, a darkening economic outlook, in part caused by geopolitical tensions, looks set to further reduce the potential for international cooperation in 2019,” it added.

Although political and economic worries were top of the immediate agenda for the 1,000 experts polled by the WEF, the environment and climate change are also a cause for concern, as are “rapidly evolving” cyber and technological threats, the WEF said.

Børge Brende, the WEF president, said: “With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation. We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us toward. What we need now is coordinated, concerted action to sustain growth and to tackle the grave threats facing our world today.”

The leaders who will begin to arrive in Switzerland in the next week include Shinzo Abe, prime minister of Japan; Jair Bolsonaro, president of Brazil; Angela Merkel, chancellor of Germany; and Wang Qishan, vice president of China.

With US President Donald Trump pulling out of the meeting to deal with the partial government shutdown, the American delegation is expected to be led by Steven Mnuchin, Treasury secretary, and Mike Pompeo, secretary of state.

The Middle East is well represented at the meeting, with at least nine heads of state or government from the region, including Palestine, Iraq, Egypt, Jordan and Lebanon. Saudi Arabia will be represented by a team of senior policymakers and business leaders.

The risk report will give them all food for thought in the Alpine resort.

Asking whether the world is “sleepwalking into a crisis,” the report responded: “Global risks are intensifying but the collective will to tackle them appears to be lacking. Instead, divisions are hardening. The world’s move into a new phase of strongly state-centered politics continued throughout 2018.

“The idea of ‘taking back control’ — whether domestically from political rivals or externally from multilateral or supranational organizations — resonates across many countries and many issues.”

Macro-economic risks have moved into sharper focus, it said. 

“Financial market volatility increased and the headwinds facing the global economy intensified. The rate of global growth appears to have peaked,” the report said, pointing to a slowdown in growth forecasts for China as well as high levels of global debt — at 225 percent of global gross domestic product (GDP), significantly higher than before the financial crisis 10 years ago.

Raising the prospect of a “climate catastrophe,” the report said extreme weather, which many experts attribute to rapid climate change, was a risk of great concern. “The results of climate inaction are becoming increasingly clear,’ the WEF said.

Of the 3,000 participants at Davos, which runs from Jan. 22 to 25, around 78 percent are men, with an average age of 54. 

The oldest will be the 92-year-old British broadcaster David Attenborough, the youngest 16-year-old South African wildlife photographer Skye Meaker.