Tuesday 14 July 2020

Dutch state increases stake in Air France-KLM to 14%, as questions remain

Is KLM facing blue skies or turbulence ahead? Photo: DutchNews.nl

The Dutch government has increased the state’s stake in airline Air France-KLM to 14% as planned, in line with the shareholding owned by Paris, the finance ministry has confirmed.

The holding company’s share price fell almost 12% after finance minister Wopke Hoekstra announced on Tuesday evening that the Netherlands was acting to exert more influence on the company and had bought an initial 12.7% stake for €680m.

The aim, Hoekstra said, is to better guarantee Dutch public interests. ‘The position of Schiphol and KLM are of great importance to the Dutch economy and employment,’ he said. ‘It involves thousands of direct and indirect jobs.’

France has been irritated by the Dutch move which was kept secret from both the airline’s board and the French government. Hoekstra is heading to Paris on Friday to explain the Dutch reasoning.

Incomprehensible

Meanwhile, more questions are being asked about why the Netherlands took the step, 15 years after the merged group was created.

The Financieele Dagblad describes the move as ‘incomprehensible’ and said it shows a lack of faith in the French authorities. ‘The French regard Hoekstra’s intervention as a heist,’ the paper said.

There is a real risk that the involvement of the Dutch will further politicise the company, and have a bad influence on its ability to do business, the paper said.

Government intervention can be justified in sectors where there is a lack of innovation and in which the market is failing, the FD said. ‘But in this case there is no question of this happening.’

Plot

The AD says ministers have been plotting such a move for 18 months and that the cabinet was only fully informed two weeks ago.

‘The Netherlands will have to do its best to restore the relationship with the French,’ the paper says. Its sources describe the crisis of the past few weeks – when it appeared as if KLM chief Peter Elbers may lose his job – as the most serious in the combined group’s history.

Dynamic

Air France-KLM said itself in a short statement that ‘the board will ensure that this initiative will not negatively impact the new working dynamic of the group and its companies, recently initiated by the group CEO’.

This acquisition, statement said, comes at a time that all stakeholders, including the Dutch state, had approved the group’s new managerial organisation.

‘The group was also ready to confirm to the Dutch government commitments to continue strengthening Schiphol’s development as a European hub and to support KLM’s development, the statement said.

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