Air France CEO wanted: Must have stomach for a fight, pay lousy

Alexandre de Juniac's exit as chief executive officer of Air France-KLM Group leaves the company with the unenviable task of finding a successor prepared to face down unions in one of Europe's bitterest labor disputes while offering little in way of enticement.

De Juniac's departure, after three years of clashes with workers and only lukewarm support from the company's 15.9 percent state shareholder, wrong-footed Europe's biggest carrier and forced it to hire a recruitment headhunter.

Not only must the incoming chief renew hostilities with labor groups to force through cost cuts analysts say are vital if Air France-KLM is to survive the challenge of discount rivals in Europe and Gulf carriers in the long-haul market, they must do so on a salary that's small by private-sector standards.

De Juniac, who will leave by Aug. 1 to run the International Air Transport Association, was paid 675,000 euros ($768,000) in 2014, the most recent year for which Air France-KLM has published numbers.

In the same year, Richard Anderson, CEO of the company's U.S. ally Delta Air Lines Inc., received $17.6 million. Carsten Spohr, who heads Germany's Deutsche Lufthansa AG, itself beset by labor strife, got 2.67 million euros in 2015, including 1.2 million euros in base pay.

Even if the airline and government decided to seek a non-French successor, the remuneration gap, a consequence of caps tied to the company's partial state ownership, would probably put most major industry figures out of the running.

"The salary limits hiring possibilities and makes foreign recruitment almost impossible," said Christine Alibert, president of the Paris branch of executive-search firm Boyden. The modest pay and need to understand and manage relations with unions and government means De Juniac will most likely be replaced by someone from within the elite of French public service, she said.

That's already a well-worn path at Air France-KLM, with De Juniac himself a former chief of staff to International Monetary Fund Managing Director Christine Lagarde when she was French finance minister under President Nicolas Sarkozy, as well as an adviser to her successor, Francois Baroin.

France's Socialist government may insist on making the ultimate choice after Air France got its way over the appointment of De Juniac, associated with the French right because of his links to Sarkozy, in 2013, a year after Francois Hollande had been elected president.

Among internal candidates, Frederic Gagey, who heads the Air France unit from which De Juniac himself was promoted, has the strongest claim, according to analyst Yan Derocles of Oddo Securities, together with KLM CEO Peter Elbers and Lionel Guerin, a former pilot who leads regional unit Hop! and is seen as driver of the company's short-haul restructuring.

The appointment of a transitional team lacking executive authority, or a technocrat CEO likely to compromise on cost cuts as low fuel prices temporarily bolster margins, would be bad news for investors, Derocles said.

"What worries me is that they will find someone who won't have the capacity, when negotiations really get going, to say, here's my plan, this is what we need to do," he said. "They need a guy who can stick his hand in the engine."

A lingering suspicion that De Juniac, aged 53 and awarded a four-year contract last year, quit because he was stopped from enforcing his strategy also means the company will struggle to lure a "charismatic leader," Derocles said.

De Juniac did little to sweeten the pill in an interview on RTL radio, saying his successor must press on with restructuring plans while finding a way to win pilot backing if it's to "stay in the race" with the carriers outperforming it.