Air France gets fresh set of eyes in Air Canada’s Ben Smith
Air France-KLM’s new leader may have close to two decades of aviation experience, but in many ways he is an outsider in his new job.
Ben Smith is Canadian, a flash point for unions who called the appointment of a non-French CEO inconceivable. He’s also a departure from the routine at French companies with state involvement, whereby the government would cycle executives in and out of high-powered roles, be it a utility or an airline or a senior political post. And by European airline standards, having a foreigner run a national carrier remains the exception, rather than the rule.
But all those points give Smith the advantage of a fresh start, something that both his predecessors were denied when they came in and were later whisked out by fierce union opposition. His credentials as a dealmaker were touted by the French government, which owns a 14 per cent stake, pointing to the task that lies ahead for Smith: pacify unions, rebuild trust from customers and catch up with rivals like British Airways and Lufthansa that have already made their peace with workers after years of crippling strikes.
“As an outsider, we expect him to bring valuable fresh perspectives, without historical baggage,” Gerald Khoo, an analyst at Liberum in London, said in a report Friday.
For the unions, it’s not just that the 46-year-old 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 Friday that investors’ support for Smith’s appointment was a red flag.
“He has the favour of the fiairlines nancial markets because when his name appeared in the press Wednesday the share price of Air France-KLM finished higher,” Salles said in an interview on France Info radio. “For us it’s a worry.”
But 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 AG. But there are also plenty of examples of foreigners running airlines including Emirates Airline, Etihad Airways PJSC, EasyJet and IAG SA, the owner of Air France-KLM’s archrival, British Airways. Nationalities aside, one thing all major have in common is that they’re run exclusively by men.
“He is the first non-French national to be appointed as group CEO,” said Khoo, the Liberum analyst. “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.”
Smith, Air Canada’s operations chief, will take over as Air FranceKLM CEO by Sept. 30, the Parisbased airline said in a statement late Thursday. His predecessor, Jean-Marc Janaillac, quit this year after failing to end a series of crippling strikes. The company also needs to appoint a non-executive chair and said it would announce its choice “as soon as possible.”
“I am well aware of the competitive challenges the Air FranceKLM Group is currently facing and I am convinced that the airlines’ teams have all the strengths to succeed in the global airline market,” Smith, an anglophone who also speaks French, said in the statement.
Air France shares slumped 3.5 per cent to 8.73 euros at 11:20 a.m. in Paris, extending their loss for the year to 36 per cent.
Smith’s likely salary of $1.2 million may also make in a target in France, where high executive salaries are politically incorrect.