Air France head warns of zero growth, shares plunge

PARIS: Shares in Franco-Dutch airline Air France-KLM plunged more than 10 per cent on Thursday after its chairman warned of three years of zero growth.

The financial newspaper Les Echos said that company chairman Jean-Cyril Spinetta had told a meeting of the airline's workers' committee that its development prospects had been downgraded.

"The group, which was banking on 4.0-per cent annual growth in the coming years, now foresees zero growth for the current fiscal period, which ends March 31, as well as for the two following periods," the paper wrote.

An Air France spokesman later told AFP that Spinetta "spoke of the possibility of zero annual growth in the number of Air France seats available by kilometer in 2009 and 2010."

The calculation referred to measures the total number of available passenger seats multiplied by the number of kilometers travelled.

"In a difficult context, he (Spinetta) said it was more than ever imperative to stabilise costs, which tend to increase mechanically by 3.0 per cent a year," the spokesman said.

Air France-KLM shares were down 10.80 per cent at 12.14 euros on a Paris market that was 3.39 per cent in negative territory.

Les Echos said the airline could reduce its workforce by 3.1 per cent between now and 2011, after having already halved its planned hirings over the next three years to 2,355, a step that will not cover the number of routine departures.

The figures, however, were not confirmed by the Air France spokesman.

Air France in August said it would strengthen its cost-cutting drive with an additional 190 million euros (243 million dollars) in savings, taking the targeted total for 2008-2009 to 620 million euros.

Les Echos added that despite an expected downturn in air traffic, Spinetta "is nonetheless determined to carry on with the Alitalia matter." The debt-laden Italian airline is seeking a foreign partner.

"The group (Air France-KLM) could invest 200 million euros to take a stake in Alitalia of around 20 per cent, if its bid were preferred to that of (Germany's) Lufthansa," the paper said.

The Air France spokesman declined to comment on the Alitalia connection.