The Board of Directors of Air France-KLM has made some significant announcements today. I’d say these developments are good news, though not surprising.
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 (which has met some resistance at KLM).
With today’s announcement, the Board has approved Smith’s ambitions for the Group, including his desire for more decisions to be made at the Group level. The goal here is to simplify and improve the governance of the Group.
Here’s how some of the goals of the Group are described:
- Create a new Group CEO Committee to determine the strategic direction for all Group airlines and business units. This CEO committee will be chaired by Benjamin Smith. The other members of the committee include Pieter Elbers (CEO KLM), Anne Rigail (CEO Air France) and Frédéric Gagey (CFO Air France-KLM). The three of them will report directly to Benjamin Smith.
- Increase collaboration across the Group to better capture synergies, efficiencies and economies of scale, with the aim of improving overall Group profitability
Celebrate the longstanding heritage, reputation and brand recognition of Air France, KLM and Transavia within their respective markets and reinforce the Group’s position at it two hubs, Amsterdam Schiphol and Paris-Charles de Gaulle - Simplify key Group operational processes in the following areas: fleet and network strategy, commercial and alliances strategy, human resources, purchasing, digital and data management.
The biggest announcement here involves that Elbers will stay on as CEO of KLM beyond April. This has been a huge point of contention at Air France-KLM. As I recently explained, KLM’s CEO is extremely popular with employees, but has allegedly also been resistant to working more closely with Air France.
If Air France-KLM is to keep moving forward, I think that the only option is that Elbers stays on as CEO on KLM, and that he’s also willing to help Smith execute his vision of working more closely together. It looks like thats exactly what’s happening.
Pieter Elbers will stay on, and has “expressed [his] commitment to build the Group’s success alongside Benjamin Smith.”
The Chair of the Air France-KLM Board had the following to say:
“We are convinced that Benjamin Smith and his team, with the renewal of Pieter Elbers, will drive further growth at Air France-KLM, leveraging the combined strength and experience provided by the Group and its airlines. The Board of Directors welcomes this new management structure adopted today, that will help the Group, under the clear leadership of Benjamin, achieve industry leadership and success.”
Bottom line
This is all great news for Air France-KLM. Smith has accomplished a lot in his short time at Air France-KLM, largely involving moving Air France in the right direction.
The challenge is finding a way for Air France & KLM to work more closely together without making KLM feel like they’re being held back by Air France. It looks like Air France-KLM is now on the right path towards closer cooperation.
Just saw a video I believe happened yesterday, but it showed that when the Press asked both Ben Smith and Peter Elberts to shake hands, they pretended they did not hear that despite it being repeated 3x.
I believe that due to political pressure and the need for KLM to remain in the group, Ben Smith had to give in.
Curious what the internal story is that lead to this confrontation between the...
Just saw a video I believe happened yesterday, but it showed that when the Press asked both Ben Smith and Peter Elberts to shake hands, they pretended they did not hear that despite it being repeated 3x.
I believe that due to political pressure and the need for KLM to remain in the group, Ben Smith had to give in.
Curious what the internal story is that lead to this confrontation between the 2. Don't see this getting any better anytime soon.
Hopefully Peter will be able to keep his foot firm in his believes for KLM and employees since they are still seen in the eyes of the AF-KLM group as the forgotten sibling especially with the new direction that Ben Smith's wants AF to go.
How times change - at the time of the merger, KLM was struggling to reverse years of losses, desperately needed the capital and a strong partner, as well as the alliance! Without AF, DL, SkyTeam, KLM might not even be around...
Now, KLM is doing better, but just look at the two - there is still lots of room for improvement, for example they still have separate seats across the fleets, separate IT systems,...
How times change - at the time of the merger, KLM was struggling to reverse years of losses, desperately needed the capital and a strong partner, as well as the alliance! Without AF, DL, SkyTeam, KLM might not even be around...
Now, KLM is doing better, but just look at the two - there is still lots of room for improvement, for example they still have separate seats across the fleets, separate IT systems, ... seems to me that they haven't gotten all the synergies out of the merger, but plenty more overhead...
@ callum
Somewhere respect for the worlds oldest airline would be in place, and you might not, but people around the world do care.
Further the results over 2018 are in.
1,2 billion in profit.
Of which
1.0 billion for KLM
0.2 billion for AF
Margin KLM 9,6 %
Margin AF 1,7 %
Not as profitable as KLM is a just a bit of an understatement. It’s plain embarrassing for AF. KLM keeps this group afloat. AF is dead if it continues to be this ‘pfofitable’
@Hans Peter Plesman If KLM had been profitable that consistently they would not have needed Air France to bail them out.
Hans Peter Plesman - KLM being 100 certainly doesn't mean anything to most of the world, why would we care? And while not as profitable as KLM, Air France does not lose money.
This whole saga is bizarre from an outsider's perspective (including Lucky's interest level) - seems a bit like petty nationalism.
KLM should just pull out of the alliance altogether and join up with British Airways and IAG instead.
This is the only responsible decision to be made at this time.
Hello All, having been born in an aviation family we really take at heart certain situations like this one with our beloved Dutch Klm. The merger is a complete farce it should be dissolved it does not work !!
Klm makes profit while Air France has lost millions of Euros with all their strikes.
Hope that Pieter Elbers will stay and do his best job possible !!
After all Klm is 100...
Hello All, having been born in an aviation family we really take at heart certain situations like this one with our beloved Dutch Klm. The merger is a complete farce it should be dissolved it does not work !!
Klm makes profit while Air France has lost millions of Euros with all their strikes.
Hope that Pieter Elbers will stay and do his best job possible !!
After all Klm is 100 years old this coming
October 7th and that means something to the all world !!
Best regards , Hans Peter Plesman
grandson of Dr. Albert Plesman founder and president-ceo of Klm
Talking of KLM....have you seen this?
https://www.bbc.co.uk/news/uk-england-tyne-47299483
Give up with your praise for Ben Smith. It's becoming a joke on this blog.
He's hardly been there 5 minutes yet according to you he's some sort of messiah.
Please spell out exactly what he has accomplished along with the cost of his decisions.
His changes to AF whilst he was temp CE of AF will cost millions year on year in wages and expenses meaning AF will be less profitable yet that merits...
Give up with your praise for Ben Smith. It's becoming a joke on this blog.
He's hardly been there 5 minutes yet according to you he's some sort of messiah.
Please spell out exactly what he has accomplished along with the cost of his decisions.
His changes to AF whilst he was temp CE of AF will cost millions year on year in wages and expenses meaning AF will be less profitable yet that merits no comment from you.
At least you mentioned Anne Rigail (even if it was likely a cut and paste from a press releases - as generally she dosen't exist according to you.
I'm sorry, a 'Group CEO Committee' sounds like a way to circumvent the oversight a board of directors provides and a way for Smith to out manoeuvre the other group CEOs.
@Justin Pijl : that analogy *almost* worked, but in recent years, quarter after quarter, their public earnings make clear that it's LX being a crown jewel, LH hold its own grounds, while both helping to keep Austrian just afloat.
Good news. Also guarantees where given that agreements concerning KLM’s independency in the group remain in place. That’s what Elbers was fighting for.
In exchange Smith will join KLM’s supervisory board, which is a very uncommon practice in the Dutch two tier board system, but Smith managed to take that win.
They met in the middle as it seems. Tomorrow they’ll release more details, together with the 2018 results. Where KLM will take the...
Good news. Also guarantees where given that agreements concerning KLM’s independency in the group remain in place. That’s what Elbers was fighting for.
In exchange Smith will join KLM’s supervisory board, which is a very uncommon practice in the Dutch two tier board system, but Smith managed to take that win.
They met in the middle as it seems. Tomorrow they’ll release more details, together with the 2018 results. Where KLM will take the far bigger share of the profit, while being the smaller airline of the two. Let’s hope they’ll manage to get Air France up there as well.
It's more about the fact that their money is being kept from each other - KLMs in the Netherlands and AFs in France. However, the Dutch do not want these accounts to be shared because KL would become the financier of the entire group. It would be like Austria and Swiss paying for Lufthansa...
And as for as Smith's successes go, he increased personnel cost at AF by hundreds of millions, which isn't a good...
It's more about the fact that their money is being kept from each other - KLMs in the Netherlands and AFs in France. However, the Dutch do not want these accounts to be shared because KL would become the financier of the entire group. It would be like Austria and Swiss paying for Lufthansa...
And as for as Smith's successes go, he increased personnel cost at AF by hundreds of millions, which isn't a good thing if you want KL and AF to work more closely together because the French receive more salary for less work ...
Dont forget Hop and Transavia...They needs to make it much more easy to travel on a ticket with for example KLM on the first flight connecting to Transavia. Sometime you can not even check in online on that kind of trip...tech teams need to work closer etc!