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New Air France-KLM CEO vows to invest half of salary into airline shares

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New Air France-KLM CEO vows to invest half of salary into airline shares

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New Air France-KLM CEO vows to invest half of salary into airline shares

Benjamin Smith, Air France-KLM's new CEO, will invest half of his €900,000 fixed salary back into the airline's shares. © Reuters

The new head of Air France-KLM has pledged to reinvest half of his salary back into the airline as he looks to lay the groundwork for an agreement with unions.

Benjamin Smith, who was made the first non-French chief executive in August, will put half of his €900,000 fixed salary back into Air France-KLM shares.

The group — formed by Air France’s 2004 merger with Dutch KLM — had been without a permanent leader since the resignation of previous chief Jean-Marc Janaillac in May after he lost a staff vote over a pay deal that had already been rejected by Air France unions.

Twelve days of strikes cost the airline €335m in the first half of the year and one of Mr Smith’s first jobs will be to broker a deal with those unions.

“I’ve already made one personal investment by moving my family to France. Today I’ve decided to make another and invest half of my fix salary in the shareholding of the group. It is a commitment to my belief in the future success of Air France-KLM,” said Mr Smith in a video to staff on Monday, his first day on the job.

“We cannot afford to be arrogant and assume we have any more of a right to our customers than our competitors do — we have to earn their business each day. Fighting our competitors, not ourselves, is our ticket to success”, added Mr Smith.

According to people familiar with the company, Mr Smith spent his first day meeting staff at Air France-KLM headquarters and at its main hub, Charles DeGaulle airport. He also met with unions, including the pilots union, seen by many as the main obstacle to a deal.

The new CEO’s salary had become a point of contention with the unions — Mr Smith is to be paid a maximum €4.25m, including the €900,000 as a base salary and the remainder dependent on meeting all long-term and short-term performance objectives. His pledge shift upwards the performance based portion of his pay.

“We operate in a fiercely competitive global marketplace. We need to act, we need to adapt, and we need to be prepared for both, but remember that I’m not here to do this on the backs of any of you,” said Mr Smith in the video.

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