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Falling profits and Flight 447 tragedy trigger major reshuffle in Air France-KLM

Tuesday, October 18th 2011 - 02:43 UTC
Full article
Jean- Cyril Spinetta is back in the helm of the French flag carrier Jean- Cyril Spinetta is back in the helm of the French flag carrier

Air France-KLM Group recalled Jean- Cyril Spinetta, 68, as chief executive officer and ousted Pierre-Henri Gourgeon amid slumping earnings and questions regarding the role of pilots in a fatal crash.

CEO since January 2009, 65-year-old Gourgeon had been slated to stay until 2013. Instead he quit after a board meeting late Monday, with Chairman Spinetta taking charge until Air France-KLM adopts a single corporate structure that year.

Gourgeon’s position was undermined by a 60% drop in Air France-KLM share price this year, the worst performance in the region, and after safety experts said pilot training was a factor in a 2009 crash that killed 228 people.

Government official Alexandre de Juniac, 48, will serve as CEO of the Air France unit, a post Gourgeon occupied, the Paris-based company said yesterday in a statement.

The announcement came after the close of trade in Paris. Air France-KLM shares rose 1.4% to 5.61 Euros, paring a gain of as much as 6.2% on reports of a management reshuffle. The company has a market value of 1.68 billion Euros, down about 60% since it first listed in 1999.

“In the current economic context, top priority must be given to the recovery and improvement of the performance of Air France and of KLM” read the statement. “Consequently, the setting-up of a full-dedicated Air France-KLM holding, which was to be implemented at the beginning of 2012, has been put off. In these circumstances, Pierre-Henri Gourgeon has resigned from his duties as CEO of Air France and Air France-KLM.”

Air France-KLM suffered operating losses in two of the past three fiscal years following 11 years of profitability on that basis under Spinetta, who ran Air France and later the enlarged company formed via the purchase of KLM Royal Dutch Airlines NV from 1998 through the end of 2008, with Gourgeon as his deputy.

De Juniac will take charge of turning round the Air France unit, the company said, subject to the appointment being approved by a state ethics committee, given his government role.

The official served as chief of staff to French Finance Minister Christine Lagarde and more recently as an adviser to Francois Baroin, Lagarde’s successor after she stepped down in June to head the IMF. The state still owns about 15% of Air France-KLM.

France’s BEA crash investigator has published two reports showing that the crew of Air France flight 447 pulled the jet into a steep climb until it slowed to an aerodynamic stall before slumping into the sea while en route from Ro do Janeiro to Paris in June 2009, killing everyone aboard.

A book published last week with the title “Piloting Error, Volume 5” disclosed what it said were further recordings from the doomed Airbus SAS plane’s cockpit, revealing a scene dominated by confusion, a lack of coordination and denial among the flight crew as the jet plunged toward the ocean.
 

Categories: Politics, International.
Tags: Air France.

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