The Dutch government increases its stake in Air France-KLM: the honeymoon is over

The Netherlands has just announced the acquisition of 12.68% of the capital of Air France-KLM in order to better defend Dutch interests in the airline. And plans to raise its stake to the same level as the French government, i.e. 14.3%.

If some wondered how long the honeymoon would last after the announcement of the new governance of the group, which itself had put an end to the a period of uncertainty about the future of Pieter Elbers, the president of the Dutch airline, finally maintained in his functions, and well they have the answer: 1 week.

Because this is not an investment at all, but a political gesture on the part of a country that considers that, given the importance of KLM for its economy, its interests have too often been neglected in favor of French interests in the airline’s management. The Netherlands is therefore positioning itself more as an activist shareholder than as a “sleeping partner”.

What should we think about it?

The paradox of KLM

At TravelGuys we know one thing for sure: we are not fans of shareholder states for simple reasons of economic realism. When politics replaces business, it is rare to make the right decisions for the future of business. An obvious opinion for Air Francewhen one knows the legendary mediocrity of the French State as a shareholder, but which is also true for the Netherlands, even if one does not doubt that our Dutch friends are more business oriented.

However, we cannot blame them for preserving their national interests, as it is obvious that the Dutch airline has been penalized by the paradox of its position in the group. Yes, Air France is bigger, yes, without the takeover by Air France KLM would certainly no longer be there or no longer in this form, yes, all of this means that the center of gravity of decisions is leaning more towards the French side, but we must not lose sight of the fact that in recent years it was KLM that boosted the group’s profitability while Air France was suffering or even declining.

Pacified airline and divorced shareholders?

With this operation, there may be a real risk that two shareholders sharing nearly 30% of the airline’s capital will look at each other in anger, or even fight. The fact that neither the airline’s board of directors nor the French Minister of the Economy is involved shows that the Dutch are in an offensive mood, and the French are likely to react to the cavalier nature of the maneuver.

And Air France-KLM did not need this. The airline has been sending a number of positive signals lately, the new governance set up by Ben Smith promised a united and depoliticized team in a peaceful context, this is not the time for the States to come and spoil the party while the business is finally up and running.

It remains to be seen whether these two shareholders will know how to behave like adults or whether their quarrels will penalize a business that does not need them and has just put its house in order.

Our opinion on this issue is clear: the solution is not for the Netherlands to enter the capital of the group, but for the French State to leave it.