Air France's Boost Could Ply Atlantic as Well as Serve Asia

(Bloomberg) -- Air France-KLM Group's new low-cost, long-haul Boost arm could provide trans-Atlantic services as well as helping Europe's biggest airline compete with Persian Gulf carriers on routes to Asia.

Asked whether the start-up might also perform westbound flights, Franck Terner, who heads the company's Air France unit, of which Boost will be part, answered: “Could be, why not?”

Air France-KLM views the SNPL pilot union's plans to meet on June 8 and discuss whether to put Boost contracts to a members' vote as a positive development, Terner said Tuesday in an interview in Cancun, Mexico. Flight crew belonging to the labor group have already backed the terms in principle after the company scrapped a 15 percent cut in pilot pay at the unit in favor of a 1.5 percent reduction across the whole of Air France's cockpit employees.

Terner, who was speaking on the fringes of the International Air Transport Association's annual meeting, added that the Paris-based company will move forward with Boost regardless of pilot backing, adding that “the negotiation itself is finished.” Former Air France-KLM Chief Executive Officer Alexandre de Juniac -- who now heads IATA -- was forced out of the airline after seeking to expand short-haul discount arm Transavia without pilot backing.

Terner confirmed that Air France aims to hire about 500 new flight attendants for Boost by mid-2018. Jean-Marc Janaillac, De Juniac's successor, said last month that the unit will start medium-length flights this year followed by long-haul operations next summer.

Air France-KLM declined 0.7 percent to 10.65 euros as of 9:12 a.m. Wednesday in Paris. The stock has more than doubled this year, valuing the airline at 3.2 billion euros ($3.6 billion).

No Fleet Deferrals

New routes will account for about 30 percent of the Boost network, Air France has said, with the carrier operating a mix of Airbus SE A320-series narrow-body planes and twin-aisle A350s, which will replace older, four-engine A340s.

Janaillac, who announced plans for Boost in November, wants the business to have a cost base 15 percent to 18 percent less than the rest of Air France, depending on sector length, to be achieved through lower pay for cabin crew, reduced catering and support costs and charges for a variety of paid-on-board options.

The group has no plans to defer the delivery of 21 A350s to its French arm and seven to Dutch division KLM, or any other planes, Terner said, especially given a program to expand capacity by as much as 3 percent through 2020 and the need to replace older models.

Discussions are underway about a possible expansion of the company's trans-Atlantic joint venture with Delta Air Lines Inc., he said, without commenting further. Delta CEO Ed Bastian has said recently that the U.S. carrier wants to work more closely with its partner and boost links to Paris and Amsterdam.

To contact the reporter on this story: Michael Sasso in Cancun, Mexico at msasso9@bloomberg.net.

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Christopher Jasper