France warns of Air France-KLM 'instability' as Dutch up stake

28/02/2019 | 698 words

France on Thursday urged Dutch officials to guard against management "instability" at Air France-KLM after the Netherlands upped its stake in the binational holding, putting it on equal footing with Paris in a bid to gain more oversight over the company.

French Finance Minister Bruno Le Maire accused the Dutch government of "destroying value and creating instability" after lifting its stake to 14 percent, just shy of the 14.3 percent held by France.

France was caught off guard by the stealth purchases unveiled this week, and Le Maire said he would demand explanations from his Dutch counterpart Wopke Hoekstra in Paris on Friday.

"Between two states, which are friendly and close founding members of the European Union, such behaviour is unacceptable," Le Maire told Public Senat television.

"It's not reasonable to remain in this situation, which benefits nobody," he added.

The stake purchase comes just weeks after tensions flared over the renewal of Pieter Elbers as head of the KLM unit, and reports of Dutch fears that flights would be shifted from Amsterdam-Schiphol to the Paris's Charles de Gaulle hub.

Le Maire denied that Air France-KLM was at risk of a divorce, but said he expected Dutch proposals on how to ease the crisis as CEO Ben Smith tries to improve profitability in Europe's cutthroat aviation market.

"It's not the French or Dutch governments that will best manage Air France-KLM, it's Ben Smith, Mr Elbers and the Air France-KLM board," he said.

"The company will do better if we work together," he said.

- Dutch resentment -

Dutch newspaper AD reported Thursday that Prime Minister Mark Rutte began discussing the Air France-KLM stock buy as early as 2017 in top-secret meetings with just Hoekstra and two other ministers.

Alarm bells started ringing after Delta and China Eastern Airlines each bought stakes of 8.8 percent in the airline, AD said, prompting fears of a threat to the status of Amsterdam's Schiphol airport as a major European hub.

A series of costly strikes last year by pilots and other staff at Air France added to concerns that KLM's profits were being used to spare the French airline from making painful cost-cutting steps.

They ended only after Smith agreed to multi-year pay increases that analysts said were barely justified by Air France's finances.

KLM's operating profit of 1.1 billion euros ($1.25 billion) last year far outsripped the 266 million reported by Air France -- even though Air France has a fleet of more than 300 planes, compared with around 170 for KLM.

"In an ever more competitive aviation industry, KLM has watched, flabbergasted, as the French side does everything it can to avoid change, especially its pilots," French daily Le Figaro said in a front-page editorial Thursday.

"At a time of rising nationalism, this two-speed progress renders things impossible in the alliance," it said.

- Board seats? -

Air France-KLM shares fell a further 2.6 percent on Thursday to 10.94 euros, after sinking 11.7 percent on Wednesday on news of the Dutch stake purchase.

The Air France-KLM board, after a hastily convened meeting Wednesday, said it would "closely monitor the consequences" of the Dutch move.

But it remains unclear if it will give additional seats to Dutch government representatives.

The Dutch have five board seats, compared to 11 for France.

The conflict poses a tricky challenge for Ben Smith, a Canadian who became the first non-French leader of the holding in September following the strikes that cost the previous CEO his job.

Concerns have been growing in the Netherlands that Smith is looking to shift more KLM flights to Paris from Amsterdam in a bid to better compete against Lufthansa, and British Airways and Iberia owner IAG.

"KLM's position has been constantly eroded over the past few months," Hoekstra said on Tuesday. "We now have a seat at the table."


Related articles

Dutch staff warn Air France-KLM of strikes over chief

Air France-KLM gets boost from employee accord

New Air France-KLM chief vows to invest half of salary in airline

Embattled Air France-KLM stock jumps as hotel group studies bid

18/07 A look back at how the partnership between AFI KLM E&M and GMF AeroAsia was finalised
18/07 A bright future for AFI KLM E&M's activities
18/07 Jean Kayanakis (Dassault Aviation): "Customer service quality is now clearly a critical argument"
18/07 A very good Paris Air Show for Collins Aerospace's aftermarket activities
18/07 Air Support becomes a Meggitt approved repair station for high pressure engine valves
18/07 Sabena technics is ready for the A330 MRTT
18 JUL 2019
S7 TECHNICS has started to manufacture plastic products using vacuum thermoforming. The new method will allow the Russian MRO company to considerably expand the range of items it is able to produce for aircraft interiors. The first parts produced were plastic passenger seat backs that are being installed on S7 Airlines' Airbus A320 family of aircraft.
18 JUL 2019
AESL (Aircraft End-of-Life Solution) has acquired an Airbus A330-200 (MSN 195, PW4000, CS-TOI, ex-TAP) for dismantling. The aircraft will land at Twente airport in late July.
18 JUL 2019
AAR has won a four-year maintenance contract with the ROYAL NETHERLANDS AIR FORCE (RNLAF) to perform maintenance, repair and overhaul of the CH-47 Chinook APU for Logistics Centre Woensdrecht (LCW). The US MRO company has been present on the RNLAF F-16 fleet for more than 25 years. AAR will provide this new contract from its Component Repair facility in Amsterdam.
18 JUL 2019
SAFRAN HELICOPTER ENGINES and THAI AVIATION INDUSTRIES (TAI) have signed an agreement to extend their support to helicopter engines used by the Royal Thai Armed Forces and Thai parapublic operators. This agreement, which follows a previous partnership signed in 2017 for Makila turbines (H225), is based on a Global Support Package (GSP) and now covers around fifty engines.
15 JUL 2019
PARKER AEROSPACE announces that its subsidiary Aerospace Component Engineering Services (ACE SERVICES, a joint venture with SIA ENGINEERING) will become a global centre of excellence for the 747-400 and 747-8 flight controls (manufactured by PARKER AEROSPACE). It has already extended its capabilities to the maintenance of the 747-400 and will be able to fully assume the maintenance of the 747-8 from the third quarter of 2019. These operations are shifted from its specialized division in Utah to Singapore.
ALERTAVIA, the News platform for Aerospace and Defense industry Professionals.

Featured Content
AFI KLM E&M steps up a gear on CFM's LEAP
Sabena technics finally gets back on-board C-130Hs
Airbus and Thai Airways to launch a new joint venture MRO facility at U-Tapao
How Thai Airways will Expand Rolls-Royce's Trent Engine Service Network
China embarks on board aircraft recycling
Follow us
© 2019 Le Journal de l'Aviation - All rights reserved

By continuing to use the site, you agree to the use of cookies. You can find out more by following this link.  OK  Find out more