Air France Grapples with Strike and CEO Resigns

Negotiations over pay aren't going well at Air France, and CEO Jean-Marc Janaillac has stepped down as a result. The last straw was a pay increase proposal that failed to win staff support. The company offered 7% increases over five years, but the union is holding out for 5.1% this year.

You may remember the last highly publicized conflict at Air France, in 2015, when employees angrily ripped clothing off two company executives after 3,000 layoffs were announced. Janaillac was appointed in 2016 to resolve the disputes, but they have continued, and investors have expressed their frustration: the stock is down 40% this year.

Air France says rising fuel prices and a strong euro will make the strikes more challenging for the airline, which managed to keep long-haul flights on schedule but cancelled about 20% of medium-haul and some short-haul flights because of staffing shortages.

In his resignation speech, Janaillac was emotional, clearly disappointed in the outcome. Unfortunately, his decision to step down didn't inspire investors, who responded by bringing the share price down another 14%.

French Prime Minister Bruno Le Maire refuses to bail out the company:

“If it doesn’t make the necessary efforts to be at the same competitive level of Lufthansa and other major airlines, it will disappear. I am not taking the money of the French and putting it in a company that isn’t at the required competitive level.”

Image source (cover).

Image source (above).

Discussion:

• How can the airline manage through the current crisis? What type of communication could be helpful at this point?
• Janaillac put his job on the line with the latest pay proposal. Did he do the right thing by resigning? Why or why not?
• Which leadership character dimensions are at play in this situation?