Attempts to return Air France to sustained profitability suffered a significant setback today, as the flag-carrier bowed to union pressure over plans to develop its Transavia subsidiary outside of France.

Pilots at Air France have been out on strike for ten days over perceived threat to their positions after the airline revealed plans to expand the low-cost subsidiary.

Management has now withdrawn parts of the plan, saying it will no longer seek to expand Transavia outside of France and the Netherlands in the short-term.

Air France said the balanced proposal meets the unions’ requirements by providing a renewed guarantee that there will be no relocation.

The airline called on the pilots to return to work immediately ending the strike which is costing around £10 million a day.

Alexandre de Juniac, chairman and chief executive of Air France-KLM, and Frédéric Gagey, chairman and chief executive of Air France, declared: “Our Transavia project is a 100 per cent pro-France project.

“It is about developing Transavia to encourage growth in France and quickly create more than 1,000 jobs in France - including 250 pilot jobs.

“With the withdrawal of the Transavia Europe project, there is now no reason to strike because there are no longer any concerns about relocation.

“We therefore call on the striking pilots to return to work immediately.”

Transavia Europe was designed to compete with low-cost carriers, including Ryanair and easyJet, which have eaten into profitability on short-haul routes operated by European legacy airlines.