Air France-KLM board to plan ouster of CEO Gourgeon

Air France-KLM Group’s board will meet to vote on ousting Chief Executive Officer Pierre- Henri Gourgeon and replacing him with Alexandre de Juniac, a former chief of staff to Christine Lagarde, according to a person with knowledge of the proposals.

Gourgeon, 65, who has been CEO since January 2009, was previously slated to stay in his position until January. Instead, he’ll leave the company within a short period of time, said the person, who declined to be identified because the change isn’t yet official.

Air France-KLM, Europe’s largest airline, has plunged 60 per cent this year, the worst performance on the Bloomberg EMEA Airlines Index, as the carrier struggles with high fuel costs and sluggish business-class demand. The airline has also faced questions about pilot training after French safety regulators reviewing the 2009 crash of Air France 447 indicated insufficient pilot training was a contributing factor.

A newspaper reported the board’s plan on Sunday, saying Gourgeon was told on October 14 that he would be replaced. The newspaper attributed the decision to disappointment with the company’s financial performance.

Jean-Cyril Spinetta will stay on as chairman of the airline, the person said. Spinetta ran Air France for 11 years, from 1998 through the end of 2008, with Gourgeon as his deputy. An Air France spokeswoman confirmed the board will meet tomorrow and declined to comment on what will be discussed.

Juniac, 48, has served as an adviser to Finance Minister Francois Baroin since Lagarde stepped down in June to head the International Monetary Fund. Juniac has been cited as Gourgeon’s likely successor in French media reports since June.

Air France-KLM had operating losses in two of the last three fiscal years following 11 years of profitability on that basis under Spinetta.

The carrier has lately come under renewed pressure from investors and analysts to deepen cost cuts to achieve a more level footing with its biggest European competitors, Deutsche Lufthansa AG and British Airways Plc.

Gourgeon himself said at a briefing Sept. 9 that the airline was at a competitive disadvantage to rivals and needed action, though analysts including Yan Derocles at Oddo Securities had criticized Air France-KLM for failing to introduce bigger cost-cutting targets.