Dutch State raises stake from 5.9% to near 13%
#31
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However, given what AFKL is rumoured in the Dutch press to have had up their sleeve for KLM in this "closer alignment" scenario, for KL, their interests are most definitely tied up in maintaining their degree of autonomy!
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#33
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#34
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This is not to say that they might not have some good reasons to be suspicious of the intentions of AF people but the kind of conspiracy theory that sees Ben Smith as hellbent on destroying KL for the benefit of AF strikes me as not a particularly healthy or convincing perspective. Some shoulders could do with some dusting to eliminate oversized chips.
#35
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https://www.parool.nl/amsterdam/bezo...ster~a4623726/
https://www.luchtvaartnieuws.nl/nieu...smith-over-klm
#36
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Can someone help me what the fuss is all about? What issue do people in the Netherlands have with the strategy? I did follow the story, and what I had understood was
- Pieter Elbers and Ben Smith don't like each other, and there was a possibility of PE's CEO-ship of KLM not being renewed, which people in the Netherlands were concerned about >> not an issue anymore, PE has been re-appointed as CEO of KLM, and is Deputy CEO of the group.
- Ben Smith's strategic vision for the group was that AF was going to be the premium brand whilst KLM was going to have a higher leisure component, simply because AMS is running out of capacity and therefore growth there would come from stuffing more people on planes >> what's the issue with that? It means growth for KLM, not destruction of KLM. I hope the issue is not the Dutch feeling miffed because they aren't the "premium" player anymore?
- BS' vision for the group also included more cooperation and integration in a number of central functions/shared services >> what's wrong with that? It may make perfect sense to have a more integrated operating model if it means economies of scale, higher effectiveness, a more agile company
- If they object the Dutch state, i.e. that of the other national carrier that is part of the group, being a shareholder just in the same way that the French state is >> a clear sign of what many suspected all along, the French believe that AFKL is French and that KLM is a vasall, and that in France people still think of AFKL of a company that is and should be state-influenced. It also reveals the widely held belief in France of "we saved KLM, and so they should shut up and be controlled", and of "we bought KLM, and so they should shut up and be controlled".
And: can someone recount here the *exact* details of the AFKL merger? What exactly did the transaction look like? Because the way I remember it it was more of a *merger*, not an acquisition by AF. And even if admittedly in a case like this the boundaries between merger and acquisition are somewhat blurred I cannot see anything that would justify "the French" of behaving like the conquistadores.
And: is it really true that KLM was at the verge of bankruptcy as "the French" so often claim? I seem to recall that KLM was indeed in a very difficult strategic position (difficult to have its global network and the AMS hub survive alone in a competitive landscape where other airlines where getting ever bigger), and a merger with AF solved many of those strategic problems. And I also do recall that there were pension liabilities of several hundred million EUR that were then funded thanks to the merger. But it wasn't the case that AF solved KL from imminent bankruptcy - or was it?
Some corporate history with precise facts on finances and strategy would be helpful.
#37
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Can someone help me what the fuss is all about? What issue do people in the Netherlands have with the strategy? I did follow the story, and what I had understood was
- Pieter Elbers and Ben Smith don't like each other, and there was a possibility of PE's CEO-ship of KLM not being renewed, which people in the Netherlands were concerned about >> not an issue anymore, PE has been re-appointed as CEO of KLM, and is Deputy CEO of the group.
- Ben Smith's strategic vision for the group was that AF was going to be the premium brand whilst KLM was going to have a higher leisure component, simply because AMS is running out of capacity and therefore growth there would come from stuffing more people on planes >> what's the issue with that? It means growth for KLM, not destruction of KLM. I hope the issue is not the Dutch feeling miffed because they aren't the "premium" player anymore?
- BS' vision for the group also included more cooperation and integration in a number of central functions/shared services >> what's wrong with that? It may make perfect sense to have a more integrated operating model if it means economies of scale, higher effectiveness, a more agile company
- If they object the Dutch state, i.e. that of the other national carrier that is part of the group, being a shareholder just in the same way that the French state is >> a clear sign of what many suspected all along, the French believe that AFKL is French and that KLM is a vasall, and that in France people still think of AFKL of a company that is and should be state-influenced. It also reveals the widely held belief in France of "we saved KLM, and so they should shut up and be controlled", and of "we bought KLM, and so they should shut up and be controlled".
And: can someone recount here the *exact* details of the AFKL merger? What exactly did the transaction look like? Because the way I remember it it was more of a *merger*, not an acquisition by AF. And even if admittedly in a case like this the boundaries between merger and acquisition are somewhat blurred I cannot see anything that would justify "the French" of behaving like the conquistadores.
And: is it really true that KLM was at the verge of bankruptcy as "the French" so often claim? I seem to recall that KLM was indeed in a very difficult strategic position (difficult to have its global network and the AMS hub survive alone in a competitive landscape where other airlines where getting ever bigger), and a merger with AF solved many of those strategic problems. And I also do recall that there were pension liabilities of several hundred million EUR that were then funded thanks to the merger. But it wasn't the case that AF solved KL from imminent bankruptcy - or was it?
Some corporate history with precise facts on finances and strategy would be helpful.
And KLM was never even close to bankruptcy, unlike Swissair, Sabena, etc. Both AF and KL needed the merger. AF was a little bit outsized by BA and LH at the time and KL was not performing very well in these years. Both benefited from the merger (IMO KL even more than AF).
Then over the years, KL has made more costs and efficiency improvements than AF and it's a better run airline than AF. That can not be denied.
But more synergies can really be made and a lot of AF and KL competences could be transfered to AFKL holding, which would greatly benefit both KL and AF. It makes no sense to have two IT systems for instance (and it has nothing to do with autonomy, independance, etc.)
I think "the Dutch" needs to accept KL is part of a multinational group and is not a Dutch company anymore. And "the French" needs to accept that AFKL is not French either and not their private property.
#38
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Last edited by pjhartog; Mar 1, 2019 at 3:31 am Reason: wrong link
#39
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Can someone help me what the fuss is all about? What issue do people in the Netherlands have with the strategy? I did follow the story, and what I had understood was
- Pieter Elbers and Ben Smith don't like each other, and there was a possibility of PE's CEO-ship of KLM not being renewed, which people in the Netherlands were concerned about >> not an issue anymore, PE has been re-appointed as CEO of KLM, and is Deputy CEO of the group.
- Ben Smith's strategic vision for the group was that AF was going to be the premium brand whilst KLM was going to have a higher leisure component, simply because AMS is running out of capacity and therefore growth there would come from stuffing more people on planes >> what's the issue with that? It means growth for KLM, not destruction of KLM. I hope the issue is not the Dutch feeling miffed because they aren't the "premium" player anymore?
- BS' vision for the group also included more cooperation and integration in a number of central functions/shared services >> what's wrong with that? It may make perfect sense to have a more integrated operating model if it means economies of scale, higher effectiveness, a more agile company
- If they object the Dutch state, i.e. that of the other national carrier that is part of the group, being a shareholder just in the same way that the French state is >> a clear sign of what many suspected all along, the French believe that AFKL is French and that KLM is a vasall, and that in France people still think of AFKL of a company that is and should be state-influenced. It also reveals the widely held belief in France of "we saved KLM, and so they should shut up and be controlled", and of "we bought KLM, and so they should shut up and be controlled".
And: can someone recount here the *exact* details of the AFKL merger? What exactly did the transaction look like? Because the way I remember it it was more of a *merger*, not an acquisition by AF. And even if admittedly in a case like this the boundaries between merger and acquisition are somewhat blurred I cannot see anything that would justify "the French" of behaving like the conquistadores.
And: is it really true that KLM was at the verge of bankruptcy as "the French" so often claim? I seem to recall that KLM was indeed in a very difficult strategic position (difficult to have its global network and the AMS hub survive alone in a competitive landscape where other airlines where getting ever bigger), and a merger with AF solved many of those strategic problems. And I also do recall that there were pension liabilities of several hundred million EUR that were then funded thanks to the merger. But it wasn't the case that AF solved KL from imminent bankruptcy - or was it?
Some corporate history with precise facts on finances and strategy would be helpful.
"The other non-current income and expenses show a
negative amount of EUR 1,849 million. This includes,
among others, EUR 1,399 million non-cash settlement
expenses following the modification to a collective defined
contribution pension plan for cockpit crew and subsequent
derecognition of the cockpit crew pension asset and
the same modification related to cabin crew for a noncash
settlement expense of EUR 311 million, following the
derecognition of the cabin crew pension asset. In addition
a non-current expense related to a dowry payment
amounting to EUR 194 million was agreed with the cockpit
crew union, of which EUR 120 million was paid in 2017"
https://annualreports.klm.com/KLM_An...eport_2017.pdf (page 18)
Last edited by JOUY31; Mar 1, 2019 at 4:21 am
#40
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It has also been stipulated that KLM will continue to fly from the Netherlands for the next 8 years. KLM also maintains its identity and brand for 5 years. According to the State Secretary, the second public interest was that Schiphol's main port position would remain intact.
(...)
The contract contains 42 key destinations for 5 years (covers 70 percent of current destinations and 80 percent of current freight and passenger transport at Schiphol.
If these state insurances are not complied with, the Dutch state can appeal to an arbitration panel. This gives a binding advice."
These commitments have all been honored by "the French" for the duration that was stipulated, 3 to 8 years. There has never been an appeal for arbitration from the Dutch state regarding a potential breach from "the French". No unilateral change has been made by "the French" since the time limit of these commitments has been exceeded.
Last edited by JOUY31; Mar 1, 2019 at 7:21 am
#41
Join Date: May 2018
Posts: 750
Can someone help me what the fuss is all about? What issue do people in the Netherlands have with the strategy? I did follow the story, and what I had understood was
- Pieter Elbers and Ben Smith don't like each other, and there was a possibility of PE's CEO-ship of KLM not being renewed, which people in the Netherlands were concerned about >> not an issue anymore, PE has been re-appointed as CEO of KLM, and is Deputy CEO of the group.
- Ben Smith's strategic vision for the group was that AF was going to be the premium brand whilst KLM was going to have a higher leisure component, simply because AMS is running out of capacity and therefore growth there would come from stuffing more people on planes >> what's the issue with that? It means growth for KLM, not destruction of KLM. I hope the issue is not the Dutch feeling miffed because they aren't the "premium" player anymore?
- BS' vision for the group also included more cooperation and integration in a number of central functions/shared services >> what's wrong with that? It may make perfect sense to have a more integrated operating model if it means economies of scale, higher effectiveness, a more agile company
- If they object the Dutch state, i.e. that of the other national carrier that is part of the group, being a shareholder just in the same way that the French state is >> a clear sign of what many suspected all along, the French believe that AFKL is French and that KLM is a vasall, and that in France people still think of AFKL of a company that is and should be state-influenced. It also reveals the widely held belief in France of "we saved KLM, and so they should shut up and be controlled", and of "we bought KLM, and so they should shut up and be controlled".
And: can someone recount here the *exact* details of the AFKL merger? What exactly did the transaction look like? Because the way I remember it it was more of a *merger*, not an acquisition by AF. And even if admittedly in a case like this the boundaries between merger and acquisition are somewhat blurred I cannot see anything that would justify "the French" of behaving like the conquistadores.
And: is it really true that KLM was at the verge of bankruptcy as "the French" so often claim? I seem to recall that KLM was indeed in a very difficult strategic position (difficult to have its global network and the AMS hub survive alone in a competitive landscape where other airlines where getting ever bigger), and a merger with AF solved many of those strategic problems. And I also do recall that there were pension liabilities of several hundred million EUR that were then funded thanks to the merger. But it wasn't the case that AF solved KL from imminent bankruptcy - or was it?
Some corporate history with precise facts on finances and strategy would be helpful.
So why would KLM accept that? As if there is not enough room on the aviation market now? I think it would be so healthy to continue that internal competition who offers the best product, service, departure and arrival times as well the best airport to transfer in. Ben Smith has two potential winners with AF and KL, downgrading KL to a leisure oriented airline would not make sense at all. KL has a dominant position in China that AF doesn’t have. China is super important for the next years of growth.
There is Transavia that could play that role in offering leisure destinations from let’s say EIN, GRQ and RTM in The Netherlands and LYS, NTE, TLS, MRS and numorous other airports.
Not everything should be peace love and harmony between KL and AF, a good sense of competition is very healthy for both of them and makes the group stronger as a whole.
#42
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- Pieter Elbers and Ben Smith don't like each other, and there was a possibility of PE's CEO-ship of KLM not being renewed, which people in the Netherlands were concerned about >> not an issue anymore, PE has been re-appointed as CEO of KLM, and is Deputy CEO of the group.
Originally Posted by Les Echos
Selon nos informations, Bercy serait męme pręt ŕ bloquer la convocation de l'assemblée générale des actionnaires d'Air France-KLM, prévue en avril et qui doit notamment reconduire le mandat du président de KLM, Pieter Elbers, pour contraindre les Néerlandais ŕ revenir ŕ de meilleurs sentiments.
Marry in haste...repent at leisure.
Tensions have always been present:
AF-KL tensions reach new high?
Joint Dutch-French study says AF-KLM is a failure
The Independent - British Airways and KLM abandon Ł4bn merger talks
Last edited by irishguy28; Mar 1, 2019 at 4:01 am
#43
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Les Echos reported yesterday that Elber's reappointment may not yet be a done deal in the light of the Dutch government's actions...
The problem is that KLM jumped into the marriage a few years after being jilted at the altar by BA. KLM was going through a rough patch and they needed a lifeline - any lifeline. (There was also a failed merger attempt with Alitalia around the same time but that's one they probably should never have contemplated)
Marry in haste...repent at leisure.
Tensions have always been present:
AF-KL tensions reach new high?
Joint Dutch-French study says AF-KLM is a failure
The Independent - British Airways and KLM abandon Ł4bn merger talks
Willie Walsh still rues not doing the deal with KLM
Willie Walsh still rues not doing the deal with KLM - and supports Elbers at KLM.
The problem is that KLM jumped into the marriage a few years after being jilted at the altar by BA. KLM was going through a rough patch and they needed a lifeline - any lifeline. (There was also a failed merger attempt with Alitalia around the same time but that's one they probably should never have contemplated)
Marry in haste...repent at leisure.
Tensions have always been present:
AF-KL tensions reach new high?
Joint Dutch-French study says AF-KLM is a failure
The Independent - British Airways and KLM abandon Ł4bn merger talks
Willie Walsh still rues not doing the deal with KLM
Willie Walsh still rues not doing the deal with KLM - and supports Elbers at KLM.
#44
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"The state will retain its option for 3 to 6 years on 50.1 percent of the KLM shares, only to be exercised if landing rights abroad are threatened. Two foundations hold a very substantial share in KLM for 3 years. The Dutch state retains the 14.1 percent share in KLM. This interest will only be phased out by the state if the French government share in the Air France and KLM holding company is also substantially reduced.
It has also been stipulated that KLM will continue to fly from the Netherlands for the next 8 years. KLM also maintains its identity and brand for 5 years. According to the State Secretary, the second public interest was that Schiphol's main port position would remain intact.
(...)
If these state insurances are not complied with, the Dutch state can appeal to an arbitration panel. This gives a binding advice."
These commitments have all been honored by "the French" for the duration that was stipulated, 3 to 8 years. There has never been an appeal for arbitration from the Dutch state regarding a potential breach from "the French". No unilateral change has been made by "the French" since the time limit of these commitments has been exceeded.
It has also been stipulated that KLM will continue to fly from the Netherlands for the next 8 years. KLM also maintains its identity and brand for 5 years. According to the State Secretary, the second public interest was that Schiphol's main port position would remain intact.
(...)
If these state insurances are not complied with, the Dutch state can appeal to an arbitration panel. This gives a binding advice."
These commitments have all been honored by "the French" for the duration that was stipulated, 3 to 8 years. There has never been an appeal for arbitration from the Dutch state regarding a potential breach from "the French". No unilateral change has been made by "the French" since the time limit of these commitments has been exceeded.
My understanding is that the KLM CEO is reappointed by the supervisory board of KLM. Given its current composition, it is unclear that AF has a veto power.
Again, our Dutch friends might have a better understanding of the situation.
#45
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Could someone spell out the current detailed structure of KLM ownership?
My understanding is that the KLM CEO is reappointed by the supervisory board of KLM. Given its current composition, it is unclear that AF has a veto power.
Again, our Dutch friends might have a better understanding of the situation.
My understanding is that the KLM CEO is reappointed by the supervisory board of KLM. Given its current composition, it is unclear that AF has a veto power.
Again, our Dutch friends might have a better understanding of the situation.