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PARIS (Reuters) - Air France-KLM is pressing ahead with expansion of its low cost brand in France and has a back-up plan if a deadlock with pilots continues, its Chairman and Chief Executive Officer Alexandre de Juniac said in an interview published on Sunday.

Pilots ended the airline s longest strike since 1998 in late September despite continued deadlock with managers over the development of the firm s low-cost operations.

Asked why the pilots suspended the strike when the final decision was not taken, Juniac said in an interview to weekly Le Journal du Dimanche: Sense of responsibility prevailed. Our proposals remain on the table .

Air France-KLM has put the total cost of last month s two-week pilots strike at up to 500 million euros (1.3 million), enough to wipe more than a fifth off its estimated full-year core profit.

If pilots do not agree to sign the proposals, Air France may choose to set up a subsidiary of Transavia, Transavia Development, in France in a bid to develop the low-cost business with new planes that arrive in the coming months.

But it would be more simple and logic if pilots agree, de Juniac said.

With Frederic Gagey (CEO of Air France), we strongly hope that we will soon agree on the best conditions to develop Transavia France, he added.

The pilots launched their strike in an effort to force Air France-KLM to revise plans to expand its low-cost brand, Transavia in Europe, fearing that the project would erode their own pay and conditions.

The airline thus dropped its proposal to expand its Transavia low-cost operations beyond France and the Netherlands to a total of 100 planes.

In a sign of continued tensions in the aftermath of the dispute, Air France said it had been forced to cancel a meeting with unions last week to present its plans for Transavia due to the absence of unions representing a minority of staff.

The Alter union, which represents a minority of pilots, said it had not been invited and urged Air France to inform all the company s labor organizations about its plans for Transavia.

We should move quickly to avoid the risk of leaving the room for our competitors, especially at Orly (airport), where slots may become available, de Juniac added.

( =0.7920 euros)

(Reporting by Emmanuel Jarry, writing by Maya Nikolaeva, editing by W Simon)

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