After the unrest of the past couple of weeks (we reported last week) over who should have the complete control on Air France - KLM operations, the Dutch government came up with a new tactic this week by making it known that on Tuesday 26th February they had increased their shareholding in Air France - KLM from 6% to 12.68% by going on a share spending spree. A total of euro 680 million was put on the table the Netherlands Finance Minister, Wopke Hoekstra stated in a press conference held the same day.
On February 27th they continued shopping and purchased a further 1,32% of the shares bringing their stake holding up to 14%. In total, the Dutch government invested euro 744 million. The Dutch
share in AF-KL is now almost on par to that of the French government who holds 14.3%. Dutch authorities have said today that there will be no further attempt by them to go over the 14%.
The Dutch want a say in AF-KL future
The move is aimed at the Dutch government having just as much to say in the running of the joint-carriers in the future and also was seen in the Netherlands as a sign that KLM is an important asset for the Dutch economy as well as Schiphol Airport. It was a very unusual move by the Netherlands government who has during the past decades steered away from looking at such investments.
This has never really been a happy marriage.
Many KLM managers have felt that they were under the heel of the French management and they (rightly) pointed out that the Dutch carrier was the only one making money or who had their shop in order. In 2018 for example KLM recorded an operative profit of euro 1 billion whereby their colleagues at Air France only managed to reach euro 266 million.
Not an ideal situation for all concerned.
Defeat for Smith?
The battle for control of AF-KL, specifically that of KLM, was thought to have been laid to rest last week when the new CEO, Benjamin Smith and KLM’s CEO, Pieter Elbers announced that they had buried their differences and that Elbers would stay on as KLM CEO and also act as joint AF-KL Deputy CEO alongside Anne Rigail.
This it seems was not enough of a guarantee for the Dutch, who caught all unawares this week by increasing their share in Air France - KLM to almost the same amount that the French government holds.
Is this now a defeat for Canadian national Smith who made no real secret of the fact that he wants to keep KLM on a “short-leash.”
One should not forget that a further 17% of the Franco-Dutch airline is in the hands of China Eastern Airlines and Delta Airlines, who surely won’t want to sit back and watch the French and Dutch governments play ‘tit-for-tat’ with future stakes.
Another report this week stated that the French Finance Minister, Bruno Le Maire was caught unawares by the Dutch move and said he was not consulted beforehand on their intention to increase their shareholding. There are even comments from the French side that the Dutch were not being fair and speaking with a “forked-tongue.”
"Best airline worldwide"
Both sides cooled down a little towards the end of the week when French and Dutch finance minister Bruno Le Maire and Wopke Hoekstra met in Paris un order to stress the importance of the French and Dutch relationship. It was announced that a special working group with members from both sides will be formed on order to smooth out the future of the joing airline and as the ministers stressed to "make Air France - KLM the best airline worldwide."
KLM has successfully maneuvered themselves into a stronger position within the alliance by having the Dutch shareholding increased.
Still a long way to go and hopefully both sides will treat each other as equals in the future.
John Mc Donagh
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Edwin de Jongh (Monday, 04 March 2019 09:43)
A small correction; The Dutch Government had 6% of the shares of KLM and still has this 6% in KLM. On top; they now also have a share of 14% in the AF-KL holding
John Mc Donagh (Monday, 04 March 2019 13:51)
Appreciate the correction. However, how should that work in the future as far as their 14% AF-KL holding is concerned if they also have a separate 6% in KLM? Assume the 6% is purely for Dutch regulatory reasons - or?