Is it time for KLM to spilt from Air France?

The merger between AirFrance and KLM has been of little benefit to either party. KLM has been prevented from demonstrating it’s clearly more capable of making profits than AirFrance ever will be.

With the French part of this group weighing it down with poor labour relations, endless cycle of strikes and seemingly incapable of consistent profitability, the case for KLM to remain part of the group but operate completely independently in a de-merged state has never been stronger.

Group can still handle strategic aircraft purchasing, loyalty programmes and alliances, as well as viable cooperations, but it’s time to let a well run KLM show what it’s capable of, financially independent of AirFrance.

The later is hiding behind figures that simply don’t provide a fully transparent picture of where these airlines really stand.

It’s also starting to look as though AirFrance is sucking at resources KLM wouldn’t want to really give up.

Evidence that costs at KLM are being pressed from above to make up for AirFrance’s failings, have now become visible to passengers. KLM has had to cut the numbers of cabin crew to minimum in economy on long haul flights, reduce the service levels and ‘adjust’ its catering to cope with the crew reduction.

Try doing that at AirFrance and they’d be on strike in days.

The AF-KLM Group has recently taken a 20% stake in Virgin Atlantic – a stake it could only pay for by having Delta and China Southern buy shares in it. The purpose was to give Delta more control over Virgin, it’s share otherwise limited by law to 49%.

All this is part of a giant joint venture designed to reinforce Skyteam’s presence in London and across Eurasia. Quite how KLM is going to benefit from this isn’t clear. It already has a deep relationship with Delta going back years and long ties to Asia and Chinese markets. AirFrance, lagging behind as ever, is the real beneficiary.

KLM has been the looser in my opinion from day one of this partnership. It would have been better off with British Airways – it was their first choice for what became IAG.

AirFrance needs a reality check, but public opinion in France and the power of unions has kept it firmly and unwillingly in the past. The expansion of Transavia was a disaster, supposed to challenge European low cost airlines, cratered by unions and high costs.

The diversification to Joon has been slow but looks reasonably promising, despite its deeply confused marketing and target audience.

Yet AirFrance carries on, often late, frequently unreliable, yet still capable of great service in business and first class. That isn’t enough to secure a financial future.

KLM needs to be given a better way to show its mettle.

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