Air France KLM Group Make Peace On Aviation Alliance Holding Storm

The Dutch government unexpectedly announced this week that it had acquired the shares of the Air France KLM Group, which shocked AIA France. French President Macron quickly responded by asking The Hague to explain the decision that Paris considered unfriendly. The French Finance Minister called on Thursday to find a solution. He believes that this investment is a “destruction of values”. Former French Finance Minister Saban also stated that the Dutch government’s actions were “hostile methods” and shamed the European image.

The French and Dutch finance ministers met on March 1 and agreed to issue a joint proposal of the Air France-KLM Group’s organizational structure and business model within a few months to take care of the interests of both parties and calm the Dutch government’s sudden and substantial increase in the shares of the airline alliance at the end of February.

The Dutch government suddenly increased its holdings of Air France-KLM Group at the end of last month. As of February 27, it held 14% of the shares, approaching the French government’s 14.3%.

The French side once criticized the Dutch side for “difficult to understand” and “unfriendly” and complained that the Dutch side secretly increased its shareholdings without telling the French side.

The Dutch government increased its shareholding in Air France-KLM Group triggered a sharp fall in the stock price of the airline alliance. As of the evening of February 28, the stock price fell 15%. After the meeting between the finance ministers of the two countries on March 1, the stock price rebounded by 5.4%.

Reuters reported that the sudden increase in shares of the Dutch government may be due to concerns about the new operating principles of the airline alliance. Air France-KLM’s new president, Benjamin Smith, took office last August and intends to further integrate Air France and KLM, which has led to opposition from the Netherlands.

Air France and KLM Royal Dutch Airlines formed the Air France-KLM Group in 2004, and the two sides have been relatively independent. Air France issued a financial report in February, which showed that the airline operator had a revenue of 266 million euros last year, which was much lower than KLM’s 1.07 billion euros.

On the other hand, the Dutch government is concerned that deep integration with route adjustments may reduce the number of flights to the capital’s Schiphol Airport in Amsterdam, weakening the investment attractiveness and reducing jobs in the third largest airport in Europe.

Air France-KLM Group did not respond to the decision of the two governments.

Reuters reported that the Dutch government suddenly increased its holdings of Air France – KLM Group shares have been widely welcomed by the Dutch political circles. The Netherlands is scheduled to hold a senate election in May this year, and the ruling coalition led by Prime Minister Mark Rutte may lose the majority of the Senate.

French Minister of European Affairs Nathalie Loiseau has determined that the Dutch side’s approach has a political purpose: “Corporate (business) politicization is not appropriate. This may make Dutch voters happy, but you cannot make commercial decisions for elections.”

Albert Aviation

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