The company is expected to impose a disputed pay cut on its pilots, and withdraw a compensating offer of shares, at a special board meeting tomorrow. The largest pilots' union warned that, if this happened, they would "stay out of our aircraft... until the bitter end."
The dispute is also developing into one of the defining moments of the administration of Lionel Jospin. After slithering towards a classically French appeasement of the strikers last week, the Socialist-led government has now decided to back the hard line taken by Air France managers.
If this stand is maintained, it would be the first clear example of any French government, of right or left, holding the line against a malcontent special interest group in recent years.
In the middle of last week the government, under pressure from the Communist Transport Minister, Jean-Claude Gayssot, hinted that it would find taxpayers' cash to subsidise a compromise deal with the pilots. It emerged yesterday that such a subsidy, in the form of reduced employment charges, ran into adamant opposition from the Finance Minister, Dominique Strauss-Kahn.
At the end of the week, with the pilots holding out for even more, Mr Jospin decided to back his Finance Minister against the Transport Minister, a decision which could ultimately cause strife within the Socialist-Communist- Green coalition.
This was one reason why Air France was unable to meet the pilots' demands, sending the negotiations skidding off the runway on Saturday. There is also, however, a growing sense among other Air France employees that the largest pilots' union, the Societe Nationale des Pilotes de Ligne (SNPL), has dangerously overplayed its cards. Four smaller unions representing pilots broke ranks with the SNPL yesterday and put forward a possible compromise settlement.
The fact that the eight-day-old strike has dragged on into the week of the opening game of the World Cup is intensely embarrassing for Air France and for the French government. But it has also removed the controls of the dispute from the pilots' hands. Little more damage can be done to the reputation of Air France - or France. The management and government have therefore decided to tough it out with the pilots.
This new situation explains the SNPL's offer - accepted by management - to provide unpaid pilots for flights for World Cup teams and fans. It also explains Air France's decision to stop talking and impose a unilateral pay cut tomorrow.
By imposing a settlement, the government and the airline might at least rescue the planned partial privatisation of the national flag-carrier next autumn. The danger is that the airline will be left so weakened by a prolonged dispute that both an ambitious investment programme and the partial sell-off will be wrecked. If so, the whole future of Air France might be threatened.
Air France had asked pilots to take a 15 per cent pay cut in return for shares in the company. It agreed several concession last week, including the restoration of the pay cuts after a number of years and the abolition of the separate pay-scales for new, and long-serving, pilots introduced a year ago. Talks broke off after the pilots insisted that the higher pay scale, not a compromise between the two, must be the basis for any agreement.