Pandemic injects politics into the Air France-KLM survival plan
Air France-KLM’s future as a combined company will be put to the test as France and the Netherlands prepare for critical talks on bolstering the weakened carrier’s finances, according to the French transport minister. The discussions will raise fundamental questions about the way the airline is structured and backed by the two countries, Jean-Baptiste Djebbari said. The governments pledged E10.4b earlier this year to prop up the carrier’s pandemic-shattered finances, but will need to go further to ensure its survival. “Do we really want an integrated company or not?” Djebbari, 38, said at his office in Paris. “Within a contract or integrated group, benefits have to be shared and equitable.” The global health crisis has put further stress on already shaky relations between Air France-KLM’s two biggest shareholders. The slump in air travel and ensuing losses at the carrier have France and the Netherlands searching for a way to collaborate on a possible equity injection, just 18 months after a bitter and unprecedented spat. In February 2019, the Dutch government revealed it had secretly amassed a stake to match France’s 14% holding, blindsiding Paris and laying bare its intention to exert more influence on Air France-KLM, a rival to British Airways owner IAG and Lufthansa. The governments papered over their differences, but tension has remained. The latest dilemma follows a surge in virus cases that’s plunged airlines into renewed turmoil after a short-lived travel revival during the summer months. Air France-KLM CEO Ben Smith has said talks are ongoing with shareholders for a recapitalization because the state rescue package is only enough for less than a year. The company is set to publish results Friday, but has already warned of “significantly negative” earnings in H2 after a record quarterly loss in July. “What is now on the agenda is how the group can recover,” said Djebbari, a licensed business-jet pilot and former executive at Luxembourg-based operator Jetfly. “What will be the role of the states, and within its new strategy, what will be the capital needs, what kind of nationalization -- if that’s what’s needed -- and under what conditions.” Story has more.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-10-30/sky/pandemic-injects-politics-into-the-air-france-klm-survival-plan
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Pandemic injects politics into the Air France-KLM survival plan
Air France-KLM’s future as a combined company will be put to the test as France and the Netherlands prepare for critical talks on bolstering the weakened carrier’s finances, according to the French transport minister. The discussions will raise fundamental questions about the way the airline is structured and backed by the two countries, Jean-Baptiste Djebbari said. The governments pledged E10.4b earlier this year to prop up the carrier’s pandemic-shattered finances, but will need to go further to ensure its survival. “Do we really want an integrated company or not?” Djebbari, 38, said at his office in Paris. “Within a contract or integrated group, benefits have to be shared and equitable.” The global health crisis has put further stress on already shaky relations between Air France-KLM’s two biggest shareholders. The slump in air travel and ensuing losses at the carrier have France and the Netherlands searching for a way to collaborate on a possible equity injection, just 18 months after a bitter and unprecedented spat. In February 2019, the Dutch government revealed it had secretly amassed a stake to match France’s 14% holding, blindsiding Paris and laying bare its intention to exert more influence on Air France-KLM, a rival to British Airways owner IAG and Lufthansa. The governments papered over their differences, but tension has remained. The latest dilemma follows a surge in virus cases that’s plunged airlines into renewed turmoil after a short-lived travel revival during the summer months. Air France-KLM CEO Ben Smith has said talks are ongoing with shareholders for a recapitalization because the state rescue package is only enough for less than a year. The company is set to publish results Friday, but has already warned of “significantly negative” earnings in H2 after a record quarterly loss in July. “What is now on the agenda is how the group can recover,” said Djebbari, a licensed business-jet pilot and former executive at Luxembourg-based operator Jetfly. “What will be the role of the states, and within its new strategy, what will be the capital needs, what kind of nationalization -- if that’s what’s needed -- and under what conditions.” Story has more.<br/>
