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

Filed Under: Air France/KLM

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)

  1. Don’t forget France has 25% of voting power in Air France/KLM and that, the Dutch will never have this

  2. @lucky the difference between 13 and 14% is the number of votes. The Dutch government wants the exact same number of shares as the French government so they can have the exact same amount of voting rights in the company

  3. Ben, if this saga continues, do you think you’ll run out of KLM aircraft pictures for the title photo ?

  4. 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.

  5. Lucky can you stop selling incorrect incormation please. ‘…….that Air France-KLM’s new CEO wants Air France and KLM to work more closely together. KLM isn’t in favor of that…..’.
    Instead, what ‘Ben’ wants is not good for KLM, not good for Schiphol and thus not good for the Dutch economy. This is something much bigger than ‘KLM does not want to cooperate’.
    You can agree or disagree with ‘Ben’ but frankly I don’t get your blind admiration for ‘Ben’. All I have seen so far is lack of clarity and weak leadership.

  6. Why the hell is so wrong for the dutch government to own 14% of the airline if the French government owns that same 14%? I don’t get it.

  7. Having same amount of share is considered “unfriendly” by the french. You can clearly see the french de gaulle attitude here. More reason for the Dutch to be concerned about the french.

  8. Debit

    When Dutch are young they are among the world’s most beautiful, but they don’t usually have the same style and grace as they age. The Dutch are more practical and direct Germanic culture, French more romantic and passionate.

  9. I’m not sure how any of this is “messy” except to create drama that only exists via rampant speculation on this blog…

  10. I totally agree with Mauricio Matos and Sung. Frankly I feel disgusted with the french government’s reaction to KLM’s stock purchase as being “an unfriendly corporate raider”, “incomprehensible”, the business should be managed “without national public interference”, “an unfriendly, surprising move that is extremely detrimental to AF-KL financially”.

    How would the french feel if it was the other way around?

    France supports international mergers and acquisitions only if it’s the french company that takes over the foreign company and stays in charge. Otherwise they lament “the ill effects” of globalization.

  11. Lucky, not sure what the motivation of the Dutch is? You must be joking?

    It’s a vote of no trust in Ben Smith and AF in perspective of the Dutch interest in Schiphol and KLM. They gave him all the opuetunitues to take away there worries. Smith decided to be Robin Hood in France and didn’t give any clear vision of KLM.

    Ben Smith managed to satisfy the underperforming part with raises of already far above industry wages, and alianating the well run profitable part of this company.

    Like the French, the Dutch are protecting their interest, and the unprecedented non-liberal non Dutch move, even the first Dutch govt intervention of this likes since 1983 (Except the bank rescues in the credit crisis) shows how big the distrust in Smith and Air France has become in The Netherlands.

    They feel cornered, not taken serious. Smith has alienated the complete Dutch side op the group. Which is indeed an historic achievement of this ‘smart guy’.

  12. “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.”

    really ? your reporting is thoroughly biased. you can’t say KLM “wasn’t in favor” to work closely together when the new joint CEO attempted to dump (or significantly weaken) the KL CEO he saw as a threat to the stability of his throne, you know, the profitable branch of things, and all the “my way or the highway” attitude that Smith brought with him …..

    and that irony wasn’t lost on anyone that the weaker branch was the one trying to unilaterally call shots, without even bothering to consult both sides and start with some consensus. Heck, why not have Joon and Transavia folks dictate how AF does ground service for A380 F customers while they’re at it ??

  13. Also, raised their stakes again??? If you would have carefully read the press release of the Dutch govt yesterday the mentioned that they were still acquiring the tensing 1,3 % to get to 14%. They had the legal obligation to report the position they took yesterday after breaking the 5% and 12% threshold of ownership. This wasn’t a surprise at all.

    Both France and The Netherlands won’t raise their share, they just will seek a balanced future, in favor of Air France ánd KLM, and doing this they showed the do not trust Ben Smith on living up to promises made in the merger agreement. And on his vague one sided plans to ‘work more closely together’ Smith achieved he has to deal with politicians now, instead of just the French unions. Big big shane on Smith on letting this escalating this hard in just a few months. Picking a fight with the wrong side, who gaven in to reform already, of the group. Instead of the unwilling French. Bad focus, bad outcome. For everybody involved. Nothing to be proud of for him, in contrary,

  14. ‘Yesterday I explained in detail why this is going on, so I won’t fully rehash that here.’
    No Lucky, you explained what you think it’s going on from ‘Smith is the best’ perspective as probably 80% of commenters noted. I watched yesterday the comments and didn’t wanna join (I think I only commented one article about 2 years ago), but this is the step too far for me (in combination with deteriorating quality of other posts). You just lost one of your oldest followers with this kind of writting. Good luck with your blog.

  15. I don’t understand all the anti working together sentiment. KLM lost their ability to be completely it’s own airline when they agreed to merge with AF and create AF/KLM. They aren’t their own airline anymore they are a cog in the corporate engine that is AF/KLM. In fact them not working more closely with AF defeats the entire purpose of them being part of AF/KLM. The whole purpose of a merger like that is to work together to flex each other’s strengths and streamline operations otherwise it’s pointless from a business perspective. I am not saying they should erode each other’s unique identity but very well should work closely together. They are family now.

  16. Lucky, are you ever going to actually provide support for your claims regarding KLM not wanting to cooperate more closely with AF? I feel like enough commenters have sought these details in every post on this topic that it merits explanation. You’re losing credibility here…

  17. @Debit – While others are arguing about the some worthless, “who actually cares” voting rights you have the incisiveness to hit on the important important point of this whole topic. While it is debatable and honestly a close call, I’d have to say Dutch.

  18. France has problem with Japan over Nissan.

    Now they have problem with Dutch over KLM.

    Obviously, the only problem is France itself.

  19. Well a 51% stake of AF in KLM-AF was looking for trouble from day one?
    Then KLM is making huge profit / AF is loosing money?
    AF often on strike / KLM never.
    But said that , AF serves good food and fine wines (Champagne in economy) while KLM’s food is terrible and they replaced the pre-dinner cocktails by … a small bottle of water??
    I only fly KLM because i live in NL with many direct connections … not by choice!

  20. I would really like to hear Lucky providing facts for his claims, starting from Smith only wanting airlines to work together all the way to KLM not wanting this (basically I want you to explain to me how the work I do every day and the entire sections of our two companies from network planning, cargo, e&m… all the way to IT does not exist).

    On top of this – why is Dutch govt taking the stake shocking, nationalistic… while France holding the same stake is okay? What about other European airlines partially or completely owned by govt?
    What about statement Dutch finance minister that the reason this is happening is indication that contracts and agreements signed in 2004 will not be honoured?
    Shed some light on financial results from 2018 while at it (KLM announced yesterday that it will distribute 168mil to its employees through profit sharing, same amount as last year).

    I think this must be the 4th article that people call you out – prove your credibility.
    But on a serious note – I think that even you realize that ‘all I want is 2 airlines to work more closely’ is not the reason why this is happening.

  21. Even I agree that your posts about this are wildly speculative and biased and I am actually working for the competitor.
    In my opinion, very bold move by the Netherlands. Some airlines mean more than just poor profit numbers.

  22. Come on guys, this is a blog. Every blogger has the same ultimate goal – more clicks, more views, more money. You really think that he doesn’t see 100+ remarks and accidentally chooses to ignore them?
    That being sad I think Lucky looses any right to call himself aviation geek after a serious of posts like this.

  23. I don’t understand why this warrants a new article. Minister Hoekstra said two days ago that the plan was to buy the same percentage of shares as the French state has. At that moment the Dutch state had 12,6% and they wanted to increase that to 14% in the coming days.

  24. “Don’t forget France has 25% of voting power in Air France/KLM and that, the Dutch will never have this”

    True, but two foreign airlines, Delta and China Eastern, each own 8.8%. And DL especially is an “active” partner/investor, and more aligned with KL. And a combined DL/MU/NL-government holding of 31.6% could outvote the French government’s 25%.

  25. 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!

  26. ” 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)?

  27. 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.

  28. 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.

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