AIR FRANCE-KLM's new CEO Ben Smith, whose credentials as a dealmaker was touted by the French government, faces the challenge of pacifying unions, rebuilding trust from customers and making peace with staff after years of strikes.
Mr Smith is Canadian and a departure from the norm at French companies with state involvement, whereby the government would cycle executives in and out of high-powered roles.
'As an outsider, we expect him to bring valuable fresh perspectives without historical baggage,' Liberum analyst Gerald Khoo said in a report.
For the unions, it's not just that Mr Smith isn't French, it's also that he's a representative of cold-hearted capitalism. That's the view of Vincent Salles of the CGT union, who said that investors' support for Mr Smith's appointment was a red flag, reported Bloomberg.
Mr Salles said in an interview on France Info radio that 'it's a worry' for the union that the mention of Mr Smith in the media pushed up the share price of Air France-KLM.
However, it's the accusation that he isn't local that stuck the most. Most European airlines continue to be run by local CEOs, from SAS AB to Finnair Oyj to Deutsche Lufthansa.
'He is the first non-French national to be appointed as group CEO,' said Mr Khoo. 'This has already proved controversial with the French unions but we understand he has the clear backing of the French state, which remains the largest shareholder,' holding a 14 per cent stake.
Mr Smith, Air Canada's operations chief, will take over as Air France-KLM CEO by September 30. His predecessor Jean-Marc Janaillac quit this year after failing to end a string of strikes. The company also needs to appoint a non-executive chairman and said it would announce its choice 'as soon as possible.'
'I am well aware of the competitive challenges the Air France-KLM Group is currently facing and I am convinced that the airlines' teams have all the strength to succeed in the global airline market,' Mr Smith said.
Mr Smith's compensation also will make him a target in France, where high executive salaries are politically incorrect, especially at state-owned companies. Mr Janaillac was paid US$1.2 million last year. Yet Mr Smith will receive an annual salary of EUR900,000 ($1.03 million) and has the chance to earn bonuses that would bring his total compensation to EUR4.25 million a year, according to a person familiar with the matter.
A group of nine unions, including the CGT, is planning to meet on August 27 to decide the next steps to take in their long-running pay dispute. The company offered a two per cent salary rise in 2018 followed by a five per cent increase over the 2019-2021 period. Workers' rejection of that proposal led to Mr Janaillac's departure in May. Unions are demanding a 5.1 per cent increase.
Mr Smith is Canadian and a departure from the norm at French companies with state involvement, whereby the government would cycle executives in and out of high-powered roles.
'As an outsider, we expect him to bring valuable fresh perspectives without historical baggage,' Liberum analyst Gerald Khoo said in a report.
For the unions, it's not just that Mr Smith isn't French, it's also that he's a representative of cold-hearted capitalism. That's the view of Vincent Salles of the CGT union, who said that investors' support for Mr Smith's appointment was a red flag, reported Bloomberg.
Mr Salles said in an interview on France Info radio that 'it's a worry' for the union that the mention of Mr Smith in the media pushed up the share price of Air France-KLM.
However, it's the accusation that he isn't local that stuck the most. Most European airlines continue to be run by local CEOs, from SAS AB to Finnair Oyj to Deutsche Lufthansa.
'He is the first non-French national to be appointed as group CEO,' said Mr Khoo. 'This has already proved controversial with the French unions but we understand he has the clear backing of the French state, which remains the largest shareholder,' holding a 14 per cent stake.
Mr Smith, Air Canada's operations chief, will take over as Air France-KLM CEO by September 30. His predecessor Jean-Marc Janaillac quit this year after failing to end a string of strikes. The company also needs to appoint a non-executive chairman and said it would announce its choice 'as soon as possible.'
'I am well aware of the competitive challenges the Air France-KLM Group is currently facing and I am convinced that the airlines' teams have all the strength to succeed in the global airline market,' Mr Smith said.
Mr Smith's compensation also will make him a target in France, where high executive salaries are politically incorrect, especially at state-owned companies. Mr Janaillac was paid US$1.2 million last year. Yet Mr Smith will receive an annual salary of EUR900,000 ($1.03 million) and has the chance to earn bonuses that would bring his total compensation to EUR4.25 million a year, according to a person familiar with the matter.
A group of nine unions, including the CGT, is planning to meet on August 27 to decide the next steps to take in their long-running pay dispute. The company offered a two per cent salary rise in 2018 followed by a five per cent increase over the 2019-2021 period. Workers' rejection of that proposal led to Mr Janaillac's departure in May. Unions are demanding a 5.1 per cent increase.