The future of the now rudderless Air France KLM airline alliance – indeed of Air France itself – will be key to discussions at the combine’s AGM in Paris on Tuesday, even though KLM’s president Pieter Elbers has rejected suggestions the two companies should divorce.
Tuesday will also be the last day for Jean-Marc Janaillac to be at the helm of the troubled transnational alliance. Janaillac stepped down when the powerful French airlines pilots union rejected his latest offer on a pay and conditions agreement 10 days ago.
The Dutch flag carrier is holding several aces. The cost of the strikes by Air France pilots so far this year have been upwardly revised to €400m from €300m in the space of one week. And the strikes are ongoing.
KLM‘s strong cards include its profitability: in the 2018 first quarter KLM booked operating profit €32m higher at €60m. Air France posted operating losses of €178m in the same period.
Also, KLM and its Transavia subsidiary carried 4.3 million passengers in April, putting the Dutch arm ahead of Air France which moved 3.9 million passengers in that month. This was the first month since the ‘merger’ that the Dutch arm flew more passengers than Air France. This was due entirely to ‘eight days of strikes at Air France’ in April, the combine said.
There is a strong lobby saying KLM should go it alone. But KLM president Pieter Elbers flatly rejects this. Speaking on the Dutch public affairs television programme Buitenhof on Sunday, Elbers said a divorce of the two carriers was ‘not an option.’
KLM and Air France, he said. need each other. ‘We have accomplished a lot together and not everything is reflected in the balance sheet.’
Nevertheless, Air France must get its house in order, Elbers warned. Negotiations with the unions are stalled. Air France has lost 15 days this year due to strikes. And whatever the unions may believe, the French government will not invest more in the airline nor is it allowed to by the EU. ‘Air France must do it by itself,’ Elbers said.
Elbers said he wants the spirit of the early years of the alliance to return. When Air France KLM was formed in 2004, Air France chief Jean-Cyril Spinetta served as chairman while KLM president Leo van Wijk was his number two.
But the Dutch influence has steadily shrunk. Air France KLM now has a single Frenchman in charge and a supervisory board consisting of nine French nationals and four representing KLM. Yet KLM accounts for 40% of the turnover and 60% of the combine’s operating profit.
Certainly KLM is pushing for a stronger role in the running of Air France KLM – a shift in the balance of power.
The Financial Times suggested on Sunday that Pieter Elbers himself would be the best new head of Air France KLM. ‘Elbers would arguably be the boldest choice,’ the FT said.
Michiel Wallaard, chief negotiator with KLM from the Dutch CNV trade union federation, describes Elbers as striking ‘a balance between modernising and keeping the social dialogue alive.’
However, Wallard warned that there might be pressure to appoint a Frenchman. ‘We are realistic: we are owned by a French company and I don’t think they want a Dutch person to lead the business,’ the FT reported him as saying.
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