The buyback of 744 million euros of the Dutch State in the capital of Air France-KLM (i.e. 14%) has been generating a lot of negative comment since Wednesday from the French government and media.
Paris is almost talking about a humiliation, forgetting that Air France-KLM is indeed Franco-Dutch and that the Dutch government has every right to acquire a stake in the company. Both partners are European - which means that there are no restrictions on an EU member taking a stake in an EU company - and for a very long time, Air France-KLM's policy was mainly influenced by the French.
The Air France-KLM group was created by the merger of the two national airlines in 2004KLM felt the need to be part of a larger group in order to survive as competition intensified. Since then, the group has been based on a two-headed structure, with a Frenchman and a Dutchman at the helm of the company, although KLM retains a majority stake in the company. relative autonomy This is a necessity at a time when corporate cultures are very different. Air France is strongly influenced by politics, with most of its managers coming from the upper echelons of the public administration, which generally gravitates towards the arcanes of power. The Dutch are less interventionist, leaving more freedom to private management.
Everything would be great if the two entities were financially on an equal footing, which has not been the case for some time: Air France has been going through deep turbulence for the past three years, while KLM has continued to show good financial health. And as in many cases, it is the one who pays the most who ends up complaining and calling the other to account.
In the last financial year, Air France posted an operating profit of 266 million euros - weighed down by the strikes in 2018, which cost 355 million euros - while its Dutch counterpart posted four times as much, at 1.07 billion euros...
As a result Air France CEO Ben Smith on the management of KLM are very badly perceived by the Dutch. Ben Smith wants to further integrate Air France and KLM, and he believes that KLM CEO Pieter Elbers is playing a solo game in favour of the Dutch airline rather than for group synergies. Hence his attempt to get rid of the latter... The manoeuvre ultimately failed, with the unions circulating a petition and Dutch Finance Minister Wopke Hoekstra lending his support to Pieter Elbers. Ben Smith finally gave in, and the Dutchman was even asked to become deputy CEO of the holding company.
However, Ben Smith would like to fully coordinate the strategic orientations of the two carriers. The Dutch daily Handelsblad reported earlier this week that KLM fears the transfer of certain KLM business units to the holding company. According to Jan Willem van Dijk, chairman of the works council, these are three highly strategic departments: fleet development, alliances and network. The Air France-KLM group would take the ascendancy over the strategies of each company, as is the case for the Lufthansa Group or IAG, for example, where strategy is decided at holding company level. The works council has also expressed its support for Elbers. " We spoke to Smith three times and he was surprisingly clear about his plans: more group, less airline. "Jan Willem Van Dijk told Handelsblad.
The Dutch government's acquisition of a stake in KLM will in fact enable the Dutch to oppose any unilateral decisions. KLM is in fact relatively autonomous, managing for example the development of the network at Amsterdam Schiphol.
The fear of a weakening of the Schiphol hub has therefore prompted the Dutch government to take action. Ben Smith has also put some water in his wine, now talking about cooperation between the two airlines rather than integration.
For passengers, these politico-financial skirmishes will have no consequences. Quite the contrary: the fact that the Dutch hold 14% of the capital against 14.3% for the French perpetuates the group. KLM is not ready to leave the Air France-KLM holding company. This guarantees that passengers will benefit from one of the most powerful and efficient hub systems in Europe.
