Air France shares tumbled in early Monday trade as investors acted on news the airline's CEO has resigned, as staff unions rejected a pay deal and are continuing their planned strike action. There have also been strikes at the state-owned SNCF rail company.
The share price woes follow the resignation Friday evening of Air France-KLM CEO Jean-Marc Janaillac after workers rejected the company's latest wage proposal.
Switching to a "sell" recommendation from a previous "buy", Societe Generale said the staff vote "not only puts the cost efficiency targets at risk in our view, but even the integrity of the group".
Overall, this is the lowest cancellation rate since the start of the February when the pay dispute began.
Air France had offered workers a salary increase of 2 percent in 2018 and a further 5 percent over the following three years, but French unions, which have demanded 5.1 percent this year, have complained management is not serious about talks.
The French government, which is the national carrier's largest shareholder with a 14 percent stake, has said it will not ride to the rescue and a meeting of Air France-KLM's board has been called for May 15 to decide on a management transition plan.
"The important issue is right now that the company will disappear if it does not take necessary steps to be more competitive", Bruno Le Maire told French news channel BFM, warning of the impact of more strikes.
He added: "The challenge is the survival of Air France, the development of a company to which we are all attached".
"This is a huge waste that can only make our competitors rejoice", Janaillac said of the failed vote.
In the wake of the rejection of Janaillac's pay deal to Air France staff, a two-day strike over May 7 and 8 has gone ahead.
The group warned the dispute would shave at least 300 million euros off its operating profit for the full year, pulling earnings "notably below" last year's 1.9 billion euros.
"KLM might (rightfully) ask why the profits are being generated in the Netherlands but the losses being made in France", they said.
He also oversaw the launch of Joon, a low cost subsidiary of Air France, and growth in its maintenance business.