Oh my, this is escalating quickly.
It has just been announced that the Dutch government has bought a 12.68% stake in Air France-KLM for 680 million EUR, and they hope to increase that even further. For comparison, France has a 14.3% stake in the company. The Dutch government says that they are doing this to “better safeguard the Dutch public interest.”
So, what exactly is going on?
Ben Smith was appointed CEO of Air France-KLM late last year, and he has been working on getting the different business units to work more closely together. This has included Air France and KLM cooperating more closely, which has been met with resistance from KLM.
The reality is that while Air France-KLM (the parent company) is looking out for the interests of both airlines, historically a lot more focus has been on Air France. The company has always been headquartered in Paris, and up until their most recent CEO, has always had a French CEO.
Smith has been trying to get Air France and KLM to cooperate more closely. On the surface this makes sense to me, since surely there are a lot of synergies they’re missing out on. At the same time, KLM is performing well, while Air France historically hasn’t done as well (largely due to labor issues). KLM and the Dutch are worried about what closer cooperation would mean for the airline.
There had been rumors that KLM’s CEO, Pieter Elbers, wasn’t onboard with Smith’s vision for the company. This became a big issues in the Netherlands, and the government even wrote a letter of support saying it was important he stay on. It was recently announced that Elbers will be staying on, but it seems like there’s still some bad blood.
For example, this photo op between Smith and Elbers is causing many to wonder just how much bad blood there is. They’re asked three times to shake hands, but don’t do so (it’s also possible they didn’t hear it, but…).
— Remke Polder (@remkepolder) February 20, 2019
Now the Dutch government has taken this “war” to the next level, by taking a bigger stake in the company, and they’re viewing this as protecting the interests of the country.
This is going to be a very interesting situation to watch unfold over the coming weeks.
Smith is a bright guy, and I think he’s on the right track with wanting closer cooperation between the two airlines. However, he probably wasn’t quite anticipating the extent to which this would become a national issue.
At this point we have the Dutch government stepping in and trying to change the course of the airline at the cost of hundreds of millions of Euros. They’re more than welcome to do that, of course, but this will make things even more challenging.
(Tip of the hat to @thomas199023)