Dutch Government Increases Stake In Air France-KLM... Again!

Dutch Government Increases Stake In Air France-KLM… Again!

Published: February 27, 2019

This is turning into some real drama, my goodness.

Yesterday it was announced that the Dutch government bought a 12.68% stake in Air France-KLM for 680 million EUR. They expressed their desire to increase that stake even further, to match France’s 14.3% stake in the company.

Well, further acquisition didn’t take long, and as of this evening the Dutch government owns a 14% stake in Air France-KLM (for a total of 744 million EUR), meaning they’re just 0.3% short of France’s investment in the company.

Yesterday I explained in detail why this is going on, so I won’t fully rehash that here. Instead I’ll just summarize it by saying that Air France-KLM’s new CEO wants Air France and KLM to work more closely together. KLM isn’t in favor of that, and now this is becoming a national issue, rather than just an airline issue.

It’s not entirely clear to me what the Dutch’s government’s motivation is directly, other than a bit of flexing. It’s not like France or the Netherlands are majority shareholders, so it’s not apparent to me what the difference is between a 13% stake and a 14% stake, other than feeling “equal” (though I get how feeling equal might go a long way in this situation).

Meanwhile French president Emmanuel Macron is calling on the Dutch government to explain their actions here. Beyond their apparent interest in acquiring these shares, they want an explanation of why they went about it the way they did, without any sort of discussions. France’s Ministry of Economy said (using Google Translate here) “the way this position was acquired is reminiscent of trader rather than state shareholder techniques, it is both very surprising and unfriendly.”

For now we’ll have to mark this as “developing,” but suffice to say that this is getting quite messy, and is increasingly transforming from an airline issue to a government issue. I’m curious to see if the Dutch or French government tries to increase their stake in the company next.

(Tip of the hat to @thomas199023)

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Callum Guest

February 28, 2019, 8:51 pm

Nick - Lucky often acts like the aviation world is a big reality show when in reality, it's just mundane business. However, in this case he is right that there is drama. Hugely exaggerated as usual, but it's definitely there.

‼ 0

Kerry Diamond

February 28, 2019, 8:38 am

Ben Smith has made a truly remarkable achievement - by triggering the first major Dutch government intervention in a private corporation in decades. It's hard to overstate how bad the feelings must have been on the Dutch side to prompt this move from what is surely the most laissez-faire government in Europe. Smith travelled to the Netherlands only last week, ostensibly to reassure both the Dutch government and the KLM management and yet this was the end result only days later - probably the worst possible outcome for him. AF-KLM stock has fallen the most since the merger, and he will face a hostile KLM division backed by the Dutch governement moving forward. Mr. Smith may soon find it is his position that is untenable.

ChrisC Guest

February 28, 2019, 7:56 am

" Bob says: February 27, 2019 at 4:43 pm I will be very surprise if France tries to increase their stake in the company next. Emmanuel Macron is against subsidies to companies with tax payer’s money… if I understand well." Buying shares in a company on the stock market is NOT the same as a government subsidising a company. The cash the Dutch Government paid for the shares went to the people they bought the shares off and not into the company's bank account. I'd be interested to know who the Dutch Government bought their shares from. Was it multiple small buys or a block from another investor(s)?

Dutchie Guest

February 28, 2019, 7:13 am

The Dutch government approached the French in 2017 to buy a part of their stake. They did not play ball. The reason for the purchase is because the Dutch government was not consulted/informed on major decisions since 2014 while the Amsterdam hub is important to the economy. They want in again. Not hard to find these things online... Ben the world is a mystery to you isn't it. You review airlines and hotels on food and even a Dutch person (not the most advanced cuisine) can tell you have no grasp of how to do that. Stick to the chairs!

Jordan Guest

February 28, 2019, 2:13 am

Is it time for a KLexit? ;-)

Dutch Government Increases Stake In Air France-KLM… Again!

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