Air France KLM shares smudged on surprise Dutch govt.’s purchase

Wopke Hoekstra and Bruno Le Maire answer questions

Wopke Hoekstra and Bruno Le Maire answer questions

The Netherlands' finance minister, Wopke Hoekstra, and his French counterpart, Bruno Le Maire, held hurriedly arranged talks Friday in Paris and afterward both ministers pledged to cooperate to strengthen the uneasy alliance.

The Dutch and French governments kicked off a four-month project Friday aimed at making Air France-KLM more competitive - and at easing tensions between the two countries after the Dutch government's surprise purchase of a new stake in the airline alliance without informing Paris.

The Netherlands is concerned longer term that many KLM flights may be transferred to Paris, which would make Amsterdam's Schiphol lose its hub role.

Separately, Le Maire said the government will carry on with its privatisation plan for Aeroports de Paris.

Never the less, the dialectic dilemma got intense later on Tuesday, the 26th of February, as the Dutch Finance Minister Wopke Hoekstra had announced an initial acquisition of 12.7 stake of the airlines for $774 million.

KLM has slashed jobs and costs but is more profitable than Air France, which has faced extended labour disputes and crippling strike actions in recent years.

"It's not the French or Dutch governments that will best manage Air France-KLM, it's Ben Smith, Mr Elbers and the Air France-KLM board", he said.

On Tuesday, the Netherlands took Air France and the French government by surprise by buying a 14-per-cent-stake in the airline - nearly matching the France's 14.3 per cent stake - in a move to counter French influence in the airline.

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Air France-KLM shares fell a further 2.6 percent on Thursday to 10.94 euros, after sinking 11.7 percent on Wednesday on news of the Dutch stake purchase.

It said the Dutch state was not planning to buy more of the airline's shares and was not planning to take control of the company.

Air France this month reported full-year operating earnings of 266 million euros ($302 million), compared with 1.07 billion euros at KLM.

Showing his commitment to both airlines, Hoekstra tweeted later Friday that he flew to Paris on Air France and back home on KLM.

"Because much of the efficiency gains for the group over the past few years have come from KLM and not Air France (because of the union constraints), the move adds protection from this trend continuing ad infinitum", Goodall said. The Canadians, Benjamin Smith took over in September, the post of CEO of Air France-KLM.

Parts of Smith's programme may now face fresh challenges, with a second hefty government shareholder in the boardroom.

Jointly chaired by senior treasury officials, the panel will also review the two state's shareholdings in Air France-KLM and the makeup of its board, they said.

"What was unfriendly about this was the lack of warning, and the politicization of a company was inappropriate", European Affairs Minister Nathalie Loiseau told CNews television as Le Maire and Hoekstra were about to meet.

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