French, Dutch ministers pledge cooperation on Air France-KLM

Paris. The French and Dutch governments moved to calm a political maelstrom triggered by their power struggle over Air France-KLM, with finance ministers pledging to work together to improve operations at the carrier.

“France and the Netherlands want Air France-KLM to be the most competitive in the world,” French Finance Minister Bruno Le Maire said at a joint press conference in Paris Friday with his Dutch counterpart Wopke Hoekstra. The two were meeting for first time since the Dutch stealthily acquired a 14 per cent stake in the airline.

Air France-KLM shares rose 4.4 per cent to 11.33 euros at 10:02am in Paris.

Relations between the two European Union countries were put to the test this week after the Netherlands revealed it had secretly bought a holding to match the one held by France, blindsiding Paris. A French government official accused the Netherlands of “duplicity” and acting like a corporate raider, while the Dutch said they wanted to exert their influence in the running of the airline.

The tussle unnerved investors in Air France KLM who feared it would upend efforts by Chief Executive Officer Ben Smith to reduce costs. The Dutch government said it had too little leverage in KLM to be able to protect the country’s interests, which include maintaining Schiphol Airport in Amsterdam as a hub for the airline.

France has disputed the lack of Dutch influence. The French official said the airline and governments had been working on a Memorandum of Understanding to secure Schiphol as a hub for Air France-KLM. The French government is now putting that accord on hold.

Air France took control of KLM in 2004, but they have been operating semi-independently ever since, based on various agreements that made sure the Dutch government kept a say in the strategy of KLM. Last month, Smith secured a seat for himself on KLM’s supervisory board — something KLM had opposed when previous holding chiefs sought it.

Things have been rocky between the two sides recently. KLM CEO Pieter Elbers’ mandate was also renewed last month after initial squabbling. KLM employees staged a demonstration and petition backing their boss amid perceived bias against the Dutch arm. Elbers came out of the battle stronger, named deputy CEO along with the chief of Air France, Anne Rigail.