Air France-KLM to launch new budget airline: report

Air France-KLM is creating a new discount airline to compete with the likes of RyanAir and EasyJet, the union representing Air France's pilots told newspaper Le Parisien. The news comes a week after the union ended an impactful strike over cutbacks at Air France and the firm's investment in budget airline Transavia, a work action that grounded flights for two weeks in September and cost an estimated €400 million.

The aviation group faced considerable pressure by government and unions alike to limit the expansion of their budget subsidiary Transavia. Unions were concerned that the company's restructuring meant the Air France pilots would be transferred to Transavia, and forced to take a substantial salary cut.

A 2007 deal which assured unions that Transavia France would not expand its operations beyond fourteen aircraft is to be pushed aside, with management now proposing the formation of a new airline, the pilots' union said. According to reports, the company has registered the name "Transavia Company" with the French Chamber of Commerce. The union fears this will eventually be changed to the name of a new airline managed as a branch of Transavia.

The two-week pilot strike ended on Monday. Pilots and management were unable to reach a long-term agreement. Though the pilots said Air France-KLM scrapped their plans to increase investment in Transavia, the airline conglomerate said the plans were on hold and not cancelled.

Talks between management and unions are scheduled to take place this afternoon.