Air France and its main pilots’ union SNPL said on Thursday they reached a tentative deal aimed at ending a dispute over the airline’s low cost unit Transavia France, sending shares in the airline up 6 percent.
Air France said it expected the text they had agreed on to be signed in mid-November.
Air France-KLM’s plans to grow its budget brand Europe-wide had angered pilots at the French arm of the business, who went on strike for two weeks in September, costing the company some 500 million euros ($639.70 million) and forcing it to revise its plans.
Pilots feared the project would erode their own pay and labour conditions. As the dispute worsened, Air France-KLM scrapped its scheme for Transavia Europe, but pressed ahead with its plan to expand Transavia France.
According to the deal, all pilots flying for Transavia France will be employed under Transavia France operating and pay conditions. But Air France pilots flying for Transavia will be able to keep their Air France contract, the company said.
There will be a single seniority list for the units, it added, and any changes in working conditions and remuneration at Transavia France will be submitted to union representatives of both Air France and Transavia pilots.
Shares in Air France-KLM jumped on the news of the agreement and closed up 6.5 percent, the strongest performers on the Paris bourse’s broad SBF 120 index.
Like other traditional carriers, the Franco-Dutch group has been squeezed in its long-haul business by competition from Middle East airlines, on shorter routes by the low-cost sector, and by industry overcapacity.