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.
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