Valls Urges End to Strike at "Sinking" Ferry Group SNCM

Workers at France-Corsica ferry operator SNCM must end their strike and let the troubled company undergo a restructuring to secure its future, Prime Minister Manuel Valls said on Tuesday.

Loss-making SNCM, whose unions have been on strike since June 24, risks bankruptcy and needs to be placed under court protection, Valls told TV station TF1 in an interview.

"This situation cannot go on and there needs to be a court-ordered restructuring, because this company is sinking, and in fact the days of strike that accumulate are only putting it more into trouble," Valls said.

The comments were even harsher than those of France's transport minister, who first said last week that SNCM needed court protection to shield itself from a European Commission order to repay 440 million euros ($600.2 million) in state aid.

Unions oppose the court restructuring option because they fear it will lead to job losses and less favourable labour terms. The government has already instructed a mediator to facilitate negotiations between the unions and management.

"The company is in danger of death," Valls warned, saying it could still survive if its workers were ready to negotiate and to take up certain challenges, notably concerning routes to and from North Africa. He did not elaborate.

Owned 66 percent by Transdev - a public transport joint venture between water and waste group Veolia Environnement and state-bank CDC - the ferry operator has racked up cumulative losses of 250 million euros over the past decade despite subsidies it receives from French authorities.

Some legal experts say a Chapter 11-style restructuring would allow a new owner to buy some of SNCM's ships and continue some of its current routes under a new legal structure and with part of the company's staff.

SNCM's restructuring is crucial for Veolia as the current stalemate blocks a plan to sell most of its stake in Transdev - a tram, train and bus operator with turnover of 7 billion euros and 90,000 staff in more than 20 countries - to CDC.

($1 = 0.7331 Euros)

(Reporting by Natalie Huet; Editing by Robin Pomeroy)