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Air France shares dive as minister warns company could 'disappear'

Jean-Marc Janaillac, CEO of Air France-KLM Group, leaves a news conference in Paris Jean-Marc Janaillac, Chief Executive Officer of Air France-KLM Group, leaves a news conference in Paris, France, May 4, 2018. REUTERS/Charles Platiau

France shares went into a tailspin on the Paris stock exchange on Monday, falling by 13 percent after the resignation of the company's CEO.

Air France-KLM boss Jean-Marc Janaillac announced his resignation Friday after staff at the carrier's French operations rejected a pay deal aimed at ending months of walkouts.

France’s economy minister Bruno Le Maire said Sunday that Air France employees must resume dialogue with bosses and restart efforts to improve the company’s competitiveness, otherwise the airline “will disappear”.

“I appeal to the sense of responsibility of everyone involved: flight crew, ground staff, the pilots asking for unjustified pay increases,” he said on French TV news channel BFMTV. “Take responsibility – Air France’s survival is at stake.”

Le Maire added that “the state is not there to pay off the company’s debts”.

Air France’s CEO Jean-Marc Janaillac resigned Friday after the wage agreement he proposed was rejected in a vote by the company’s employees. However, the board of directors asked him to stay on until May 15, when a new “transitional” leadership will be put in place.

Until new management plans are in place, Air France executives lack a mandate to continue negotiations with unions, prolonging the dispute.

For their part, the unions have confirmed that they will be going on strike on May 7 and 8. The Air France management plans to ensure that “nearly 85 percent” of flights will go ahead on Monday, which will be the fourteenth day of this wave of strikes.

Some worker representatives hit back at Le Maire on Sunday, after he called their demands unjustified.

Unions had been calling for a salary hike of 5.1 percent in 2018 alone, and staff rejected a management pay deal offering 7 percent wage increase over four years.

"Our demands are far from astronomical," Yannick Floc'h, vice-president of the SNPL pilots union, told BFM TV later in the day, adding there was room to find middle ground between the two sides. "I think we can find a way out."

But the strikes seem to be weakening. For example, a mere 14 percent of pilots are expected to take to the picket lines, compared to between 27 percent and 36 percent in February, March and April.