Dutch want more of AF-KLM to protect a national asset

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The Dutch Government is to increase its share in Air France-KLM Group to 14.63% as soon as possible. That will match the holding of the French Government and put the two on an equal footing.

The Netherlands held a just over 5% stake for many years, while France never let its ownership drop below 14.63%.

In a bizarre argument last week when the Dutch purchased a stake that took their ownership to its current level, the French Government argued that it was “wrong and inappropriate”, a somewhat bizarre statement that surely made its own stake in the company even more inappropriate, and even more wrong.

The feeling in the Netherlands has been for some time that KLM – which recently turned in a significant $1.2 billion profit on its own, almost four times that of Air France, has been poorly treated by its sister company. The overall Group profit was minimal, swallowed up by the problems at Air France.

The new Group CEO, Ben Smith, was effectively arm twisted into keeping the popular KLM CEO by the Dutch Finance Minister writing a letter of support and unions threatening strike action, if his contract wasn’t renewed. The Dutch share purchase gave them further influence.

There’s also been disquiet at the way the Group is aiming to centralise HR and other functions away from KLM – a swipe at its independence seen as something of a step too far in Amsterdam.

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This has never been a good marriage – Air France has been a constant drag on the group, and even though Smith has finally solved most of the labour issues – pretty much giving in to union demands for the most part, it’s a long way from being able to turn in profits on the scale of British Airways for example, and the contribution that makes to IAG.

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Add to that the dismal failure of the Transavia brand to make any headway against the low-cost operators; it was supposed to be another Eurowings.  Then total failure of Joon which was the wrong answer to the problems that bedevilled Air France, add then the re-branding of the HOP! regional airline, which also failed to work and is now being effectively centralised within the main Air France brand, and you have a litany of failure on the French side.

Those days may now, at last be behind it,  but KLM should be given the respect it deserves, and while government ownership outright isn’t a solution, government interest in a national strategic asset to preserve it, can often be beneficial.

 

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