Air France tells striking unions to talk after doubling pay rise offer

Passengers walk as Air France planes are parked on the tarmac at Orly Airport near Paris as the airline’s pilots, cabin and ground crews stopped working over salaries. (Reuters)
Updated 11 April 2018

Air France tells striking unions to talk after doubling pay rise offer

PARIS: The head of Air France KLM on Wednesday denounced trade unions’ demands for a 6 percent pay increase as unrealistic, as the airline braced for the start of a seventh day of strikes that have hurt its financial performance.
Late on Tuesday, Air France doubled the 1 percent immediate pay increase previously offered to unions and proposed talks on a deal for the 2019-21 period, in response to union demands for a 6 percent wage hike.
“The offer made by the management of Air France is both strong and reasonable,” Air France KLM’s chairman and chief executive Jean-Marc Janaillac told Europe 1 radio on Wednesday.
“It would be irresponsible if the trade unions did not enter into talks, now that the management has held out its hand to them,” said Janaillac, who also reiterated that the unions’ demands for a 6 percent rise were “unrealistic.”
The strikes have so far cost Air France €170 million, and have contributed to travel disruption in France since they have coincided with railway strikes, held in protest against plans to reform the SNCF state rail firm.


Cathay Pacific shelves US dollar bond plans amid Hong Kong unrest

Updated 11 min 44 sec ago

Cathay Pacific shelves US dollar bond plans amid Hong Kong unrest

SINGAPORE: Cathay Pacific Airways has shelved plans for its first US dollar debt deal in 23 years, the airline said on Friday, after sources told Reuters that global investors had questioned the pricing due to civil unrest in Hong Kong.

The airline, the biggest corporate casualty of widespread anti-government protests in the Asian financial hub, on Friday lowered its second-half profit expectations, citing “incredibly challenging” conditions in its home market.

Cathay had started meeting investors in Hong Kong and Singapore on Sept. 24 after it mandated four banks to explore carrying out a US dollar denominated bond, according to a term sheet issued at the time, seen by Reuters.

It would have been the first US dollar debt deal for Cathay since 1996 and had been touted as a landmark transaction for the airline given all of its debt is denominated in Hong Kong dollars.

The issuance was to be unrated, and two sources with knowledge of the matter said that Cathay was willing to pay 200 basis points over the US Treasuries rate to secure three-year or five-year funding, with the size and term of the placement dependent on demand.

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Cathay has only carried out 12 bond transactions in the past decade and all were priced in Hong Kong dollars.

However, investors demanded a higher price of at least 300 basis points over US Treasuries, which made the deal more expensive for Cathay, said the sources, who were not authorized to speak publicly about the matter. Cathay’s term sheet had said the transaction would be reliant on market conditions. A Cathay spokesman on Friday said the Hong Kong dollar private placement market was providing more funding opportunities and a debt issuance in that market was completed last month. “We will continue to monitor the US dollar bond market in future,” he said in a statement.

Dealogic data showed that Cathay raised $102 million in October and $64 million in May through Hong Kong dollar denominated deals.

The airline has only carried out 12 bond transactions in the past decade and all were priced in Hong Kong dollars.

Cathay had mandated Bank of America Merrill Lynch, BNP Paribas, Deutsche Bank and HSBC to work on the shelved US dollar bond deal.