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State shareholding

Will Air France and KLM cut ties?

Air France and KLM have not been in a cuddly mood for some time. Now the current crisis could lead to a final end.

It is no secret that the love between KLM and Air France ended shortly after their marriage in 2004. And that they are now going through a real marriage crisis is no secret either. Since CEO Benjamin Smith took over the reins at the airline giant in August 2018, it was clear that his line did not please KLM CEO Pieter Elbers.

The Dutchman was against an even closer integration of the two major airlines in the group. That almost cost him his job. The Dutch government reacted by joining the group in order to gain more influence on its part. This did not improve the mood.

Governments only want to help at home
The biggest crisis in aviation history could now lead to KLM regaining its independence. As the financial newspaper Financieele Dagblad reports, there are already plans to give the Dutch national airline more independence. The Kingdom would take control through nationalisation, and France would hold a majority stake in Air France.

Indeed, both the Dutch and French Finance Ministers have promised State aid to the respective airlines. KLM can hope for two to four, Air France for seven billion euros. However, both governments have already made it clear that the money should under no circumstances help the airline in the other country.

If Air France-KLM were to be legally separated from Air France, the partnership would only focus on cooperation on routes, according to the newspaper. And it would probably not be possible without that. Neither of the two airlines is strong enough with its connections alone to stand up to big competitors like the Lufthansa Group or IAG.

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