French Gov't says Transavia deal dead; Air France-KLM denies

One month after Air France-KLM announced its intention to invest one billion euros into its budget subsidiary Transavia, French Secretary of State for Transport Alain Vidalies has announced the project's cancellation. The withdrawal comes in response to a sustained ten-day strike by Air France pilots, which stranded thousands of passengers as the airline suffered flight delays and cancellations. Confusion remains over the future of the project as Air France airline director Frederic Gagey later denied the Minister's comments. "The Transavia Europe project has been abandoned," Vidalies told RMC radio Wednesday. "It isn't suspended for three months, it's been withdrawn by management." The announcement was quickly denied by Gagey, who told Europe Radio 1 the project was instead suspended pending further talks. "We have indeed withdrawn the idea of creating the offshoot, for now, so its clear, we have understood we have to re-explain the project (to the pilots)... so we have to discuss it with our social partners and find the conditions we need to relaunch it." "Our proposal remains to suspend this project and open a wide consultation, a wide dialogue with our social partners by the end of the year," he added. Alexandre de Juniac, chief executive of parent company Air France-KLM, said the company's plan to expand Transavia in Europe is crucial to fight competition from other low-cost players. The announcement in September by Air France-KLM to compete with budget airlines easyJet and Ryanair by using their subsidiary Transavia led to heavy criticism from Air France-KLM personnel. Should the investment go ahead, many of the company's staff based in France would be transferred to Transavia Europe. Air France-KLM pilots have been on strike since 15 September, demanding that pilots transferred to Transavia receive the same terms of employment as those working for AirFrance. An estimated 200 pilots protested in Paris on Tuesday, dressed in full Air-France uniform. Pilot Alan Magi, who was at the protest said, "The number of people working for Air France is decreasing every year and there is no point building another company outside of France. We can't accept this.'' The walkout entered its tenth day on Wednesday, with Air France expected to operate only 46 percent of flights. The airline has said that the strike will cost up to 20 millions euros per day. The budget airline Transavia, owned by Air France KLM, currently operates a fleet of 30 planes and transported 6.5 million passengers in 2013.