Air France-KLM still struggles amid Franco-Dutch illusions
France is often criticised for its heavy-handed approach to cross-border industrial collaboration. Remember the tensions unleashed in the Renault-Nissan alliance when Paris pushed for a merger of the carmakers, knowing that Japan was strongly opposed? Or the battles between France and Germany for control of Airbus, the Franco-German aircraft maker? Now it is the turn of Air France-KLM, the airline created in 2004 by the so-called merger of France’s flag carrier with the Netherlands’ own champion. But, this time, it is not only French interference that is creating friction ahead of a vital fundraising — and possibly jeopardising the future of Europe’s first aviation alliance. It is also the illusion perpetuated by Dutch politicians and KLM’s management that the carrier is still an independent entity, despite having sold itself to Air France almost two decades ago. For that is what KLM did when it agreed to create what was then the world’s biggest airline by revenue. At the time, Air France was not only bigger, but healthier, than KLM. True, there were many safeguards built into the agreement that still give KLM some independence. But both airlines knew then — and should know now — that their post-Covid fortunes are better together than apart. While there has been progress on collaboration, the group needs to go further if it is to compete successfully when the market recovers and the likes of Ryanair and Wizz Air are gunning for market share. Right now, Air France-KLM is struggling with a balance sheet that cannot bear the weight of E10.4b in loans backed by the French and Dutch governments to help it through the pandemic. While there is no immediate need for cash, a big capital increase is required to cope with that debt burden. But fundraising discussions must first overcome deeply embedded Dutch suspicions about the French state that — not illogically — wants greater integration of the airline to improve competitiveness. The Dutch government, perhaps also understandably, wants to ensure that not a penny of Dutch taxpayers’ money goes to Air France, which, unlike KLM, has consistently failed to tackle the labour costs that have weighed on its profitability. Story has more.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2021-01-21/sky/air-france-klm-still-struggles-amid-franco-dutch-illusions
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Air France-KLM still struggles amid Franco-Dutch illusions
France is often criticised for its heavy-handed approach to cross-border industrial collaboration. Remember the tensions unleashed in the Renault-Nissan alliance when Paris pushed for a merger of the carmakers, knowing that Japan was strongly opposed? Or the battles between France and Germany for control of Airbus, the Franco-German aircraft maker? Now it is the turn of Air France-KLM, the airline created in 2004 by the so-called merger of France’s flag carrier with the Netherlands’ own champion. But, this time, it is not only French interference that is creating friction ahead of a vital fundraising — and possibly jeopardising the future of Europe’s first aviation alliance. It is also the illusion perpetuated by Dutch politicians and KLM’s management that the carrier is still an independent entity, despite having sold itself to Air France almost two decades ago. For that is what KLM did when it agreed to create what was then the world’s biggest airline by revenue. At the time, Air France was not only bigger, but healthier, than KLM. True, there were many safeguards built into the agreement that still give KLM some independence. But both airlines knew then — and should know now — that their post-Covid fortunes are better together than apart. While there has been progress on collaboration, the group needs to go further if it is to compete successfully when the market recovers and the likes of Ryanair and Wizz Air are gunning for market share. Right now, Air France-KLM is struggling with a balance sheet that cannot bear the weight of E10.4b in loans backed by the French and Dutch governments to help it through the pandemic. While there is no immediate need for cash, a big capital increase is required to cope with that debt burden. But fundraising discussions must first overcome deeply embedded Dutch suspicions about the French state that — not illogically — wants greater integration of the airline to improve competitiveness. The Dutch government, perhaps also understandably, wants to ensure that not a penny of Dutch taxpayers’ money goes to Air France, which, unlike KLM, has consistently failed to tackle the labour costs that have weighed on its profitability. Story has more.<br/>
