Air France cancels 60% of its flights as strike continues

A pilots strike at Air France entered its second day on Tuesday, with the two sides apparently o closer to resolving a dispute over cost cuts that has forced the French carrier to cancel 60% of flights. The airline said it expected to operate "at least 40% of its flights" on Wednesday, based on three fifths of pilots walking out, as management prepared to hold further talks with unions later on Tuesday.

The pilots are carrying out a week-long strike over Air France's plans to expand the low-cost operations of its Transavia brand by setting up foreign bases to fight back against fierce competition from European low-cost airlines. "We're continuing to negotiate, we have made proposals, we have heard the concerns of pilots who imagined that Transavia France could suddenly replace all of Air France across France," airline chief Frederic Gagey told Europe 1 radio.

The expansion of Transavia is part of a new strategic plan unveiled last week aimed at boosting earnings that sees Transavia having a fleet of 100 jets by 2017, up from about 50 now, and more than doubling passengers to 20 million, with a goal of lifting it out of the red in 2018. Gagey sought to reassure pilots, saying the Transavia fleet would be limited to 30 aircraft in France and that the idea was not to replace Air France but to complete the company's armoury "to attack a new market, the leisure market". But he ruled out giving Transavia pilots the same contracts as Air France colleagues.

Pay and conditions for pilots switching to Transavia are seen as the biggest roadblock in the dispute, which Air France has said is costing it about €10-15 million ($12.95-19.43 million) a day. Shares in parent group Air France-KLM were down 3.9% by 1032 GMT on Tuesday for a two-day drop of 7%. Gagey said he still hoped to reach operating break even over the full year, although "the chances are diminishing as the strikes go on".