David Olive: A Canadian ‘pilot’ takes the controls at Air France

David Olive: A Canadian ‘pilot’ takes the controls at Air France
The bloated workforce of Air France-KLM SA, Europe’s biggest airline by passengers carried, would be well advised to put its trust in its new Canadian CEO, announced last week, rather than whine about him.

In a joint statement last week, nine of the airline’s unions said it is “inconceivable” that a foreigner be entrusted to carry on with the “French model” of airline management.

Air France-KLM lost $406.9 million in 2017. And so far this year, the airline has endured 15 days of strikes and lost revenues.  (JOEL SAGET / AFP/GETTY IMAGES FILE PHOTO)

But that model, followed by Smith’s ousted predecessor, has consisted of frequent strikes, defecting customers, and unprofitability.

Air France-KLM lost $406.9 million in 2017. And so far this year, the airline has endured 15 days of strikes and lost revenues.

Incoming CEO Benjamin (Ben) Smith, 46, hails from Air Canada, where the 19-year industry veteran was operations chief.

Air Canada investors are benefiting from one of most impressive turnarounds in the global industry. The airline recorded profits last year of $2 billion, up from a mere $100,000 four years ago. Share value has skyrocketed from penny-stock status in 2014 to a current $23.87.

Air France-KLM stock, by contrast, has lost 76 per cent of its value since its long-ago 2007 peak.

Smith shares credit for the Air Canada turnaround with CEO Calin Rovinescu. But Smith was chief negotiator in Air Canada’s latest union negotiations, winning unprecedented 10-year agreements with pilots and cabin crew. Smith’s “dialogue-based” labour-relations skills were the top consideration in the French government’s selection of Smith. (France is the airline’s biggest investor.)

But Smith will also have to cut costs, improve operations to win back disenchanted customers, and face down aggressive rivals. Smith and Rovinescu did just that, profitably co-existing with WestJet Airlines Ltd. and Porter Airlines, whose potency as rivals matches the likes of mainline carrier Lufthansa AG and discounter Ryanair Holdings Plc.

Trump is changing the world

I once asserted that the world will change Donald Trump more than he will change it. That prediction was wrong.

The U.S. president has shattered the consensus of world leaders on trade. The world will not revert to pre-Trump globalization after he leaves office.

Trump is now busy discrediting “soft-power diplomacy,” the practice of using negotiations rather than economic and other weapons to resolve disputes.

The U.S. has demanded that Turkey release a U.S. pastor, Andrew Brunson, whom Ankara accuses of involvement in a failed 2006 coup attempt against Turkish president Recep Tayyip Erdogan.

Ankara has refused to release Brunson, a proxy for Trump’s U.S. political base of Christian evangelicals. U.S. sanctions have swiftly followed.

In order to secure the release of a single individual, Trump has made economic war with a fellow NATO member, long a U.S. ally in one of the world’s most geopolitically strategic regions.

Trump’s sanctions have inflicted on Turkey a devastating currency crisis (the lira) and a banking system now on life support, against a backdrop of runaway inflation. The U.S. vows still harsher sanctions to come.

The endgame is clear: Erdogan, a strongman once in Trump’s favour, will find a face-saving way of releasing Brunson, or he will be ousted in a military coup that this time will succeed.

Trump’s hard-power diplomacy isn’t new, but it is almost purely economic and devoid of costly and high-risk military pressure. And it will likely work, inviting its future and widespread application elsewhere.

A hapless European Union (EU) has been bedeviled by Turkey for decades, wanting to embrace Turkey as an EU member (the feeling is mutual) but unable to stomach Turkey’s abysmal human-rights record.

Against such prolonged, deeply unsatisfactory stalemates, Trump’s rapid-response short-circuiting of an erstwhile friend’s economy will prove powerfully instructive.
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News Topics :
Air France KLM named Air Canada’s Ben Smith as chief executive officer, casting aside union objections to entrust a foreigner with turning around Europe’s biggest carrier by passenger traffic. The new...
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