Cyril B
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AF To 'acquire' KLM

Fri Sep 12, 2003 9:08 pm

PARIS (AFP) - An alliance between Air France and Dutch airline KLM, amounting to a takeover by the French airline, is to be made official when their boards meet next week.

The boards are to meet on Wednesday, the financial newspaper Agefi reported Friday.

Once a two-stage share exchange has been completed, the holding of the French state in the Air France group would fall from 54 percent to 20 percent, the newspaper said.

French Transport Minister Gilles de Robien had said on French radio Notre Dame on Thursday: "Air France can link up with KLM and this would not conflict with a reduction of the state's holding to less than 50 percent."

He added that the state wanted to retain "between 15 and 20 percent" of the capital in Air France.


It seems AF will not be fully privatised.

 
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Aloha717200
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:10 pm

This is bad news. I'm going to miss those blue jumbos.  Sad  Sad  Sad

I have a friend who flies on the MD-11 as an FA for KLM. I hope he doesn't lose his job.
 
MAS777
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:14 pm

I'm sure the Blue jets will keep on flying as they are - this will be purely financial and 'on paper' if anything. Some will hopefully stand to gain a little (like me  Smile/happy/getting dizzy) since I am a member of both Skyteam and Flying Dutchman programmes!
 
FlyingDutchBoy
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:15 pm

Hmmmm...  Sad  Sad KLM in Skyteam with Alitalia? NW with Delta? well.. i dunno... just wait and see.
 
johnnybgoode
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:17 pm

i doubt that you would lose your blue jumbos. although KLM might eventually be integrated into the Air France Group, I´m pretty sure that most of KL´s operation will retain their KLM identity. Can you imagine to see only Air France aircraft at AMS???
just like one airline with two liveries. from an economic point of view not the most sensible solution, but "Air France" does neither represent a dutch or a truly european airline...

cheers
daniel
If only pure sweetness was offered, why's this bitter taste left in my mouth.
 
teahan
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:18 pm

Interesting times. I presume bad news for Amsterdam airport.

Fleet development should be interesting. Air France has an Airbus short-haul fleet, while KLM’s is Boeing. Long-haul is however compatible: A330-200 and B777-200ER/300ER.

Jeremiah
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
TriStar500
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:22 pm

I'm convinced this move will speed up the decision concerning BA/ LH/ LX quite a bit.
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jwenting
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:23 pm

If KLM and Air France start "cooperating" (which is what it will be told) KLM will go the way of Fokker quickly.
Corporate assassination, OK'd by the Dutch government for the sake of promises of EU jobs for government officials.
I wish I were flying
 
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Aloha717200
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:25 pm

Are European companies allowed to let the identity of that company continue even if it's technically a part of the new company?

I thought that in the USA there were antitrust laws against a company (an airline for instance), buying another company, but allowing that company's identity to be retained and recognized as a separate entity. Sort of line one business being actually several businesses....in other words, a "trust".

I could be wrong but I believe that's what I was told.

I thought in Europe they would have similar laws. But I admit I'm not the most informed when it comes to specifics such as these regs so any clarification is always welcome. I do hope KLM retains it's identity. And if this is allowed that does give me new faith in the Swiss Airways situation. I thought if LH purchased them, the Swiss identity would be completely dissolved.
 
teahan
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:30 pm

Aloha717200,

I can't see a problem with the above, just like one company can have multiple brands.

As for Swiss International, the brand will definitely be kept. Anyway, LH will only buy a maximum of 49%

***

The main issue I see with this AF/KLM are bilaterals/traffic rights. I doubt they currently allow for a French owned carrier to operate flights from the Netherlands to the US/wherever.

Jeremiah
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
aussieboggie
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 9:33 pm

To 'acquire' is that mean AF going the be a majority share holder in KLM Group?

Or is it just another SQ/VS thing?

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Cyril B
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 10:37 pm

Acquire means that AF will get 100% of KLM.
 
BestWestern
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 10:38 pm

KLM have been in and out of bed so often over the last 15 years or so... but SkyTeam looks good for them, with the AZ/AF/DL/NW/KL/CO link up Sky team have an excellent presence in Europe and North America...


http://biz.yahoo.com/rc/030912/airlines_klm_chronology_1.html lists their previous attempts at being big boy!


September 1989 - A group including KLM buys out Northwest Airlines (NasdaqNM:NWAC - News). KLM to take a 57 percent stake in the U.S. carrier.

November 1989 - KLM agrees to reduce stake in Northwest Airlines to 20 percent in line with demands from the U.S. government. Continues working with Northwest in transatlantic alliance.

October 1991 - KLM and British Airways (London:BAY.L - News) in talks on some form of link-up.

February 1992 - British Airways and KLM break off merger talks which would have embraced KLM's alliance with Northwest.

September 1992 - KLM/Northwest equity alliance dating back to 1989 gets U.S. anti-trust immmunity in tandem with bilateral "open skies" trade agreement between the United States and the Netherlands.

January 1993 - KLM begins talks with Swissair (Zurich:SWIn.S - News), SAS (Stockholm:SAS.ST - News) and Austrian Airlines (Vienna:AUAV.VI - News) about creating an alliance of Europe's smaller airlines.

November 1993 - Plan for "Alcazar" alliance of four rival European airlines breaks down because of rivalry between their U.S. partners. KLM sticks with Northwest while Swissair, Austrian and SAS keep Delta Air Lines (NYSE:DAL - News).

September 1997 - KLM sells back its 20-percent stake in Northwest. The two sign a 10-year commercial pact.

December 1997 - KLM and Alitalia (Milan:AZPIa.MI - News) sign a close cooperation agreement. KLM executive eventually takes charge of their passenger joint venture, while an Alitalia representative heads their cargo businesses.

May 1999 - KLM says it is looking for a possible cooperation with Air France.

April 2000 - KLM pulls the plug on its partnership with Alitalia because of uncertainty over Milan's controversial Malpensa airport and the Italian carrier's stalled privatisation.

June 2000 - KLM and BA re-enter merger discussions.

September 2000 - KLM ends talks with BA on a possible takeover after KLM refuses to give up its national identity.

October 2001 - BA says it has re-entered talks with KLM about a commercial alliance.

July 2002 - KLM says it held exploratory alliance talks with Air France about joining the SkyTeam grouping that also includes Delta Air Lines.

December 2002 - An arbitration court orders KLM to pay a 250 million euro fine and interest for breaking its partnership with Alitalia, but the Italian carrier must repay 100 million which KLM invested in the Malpensa hub.

August 2003 - KLM says no longer in talks with BA on joining the worldwide 'oneworld' alliance of carriers that also includes American Airlines (NYSE:AMR - News).

September 2003 - Speculation mounts that KLM is nearing a decision to join SkyTeam, pushing its shares to 10-month highs. Chairman of Northwest, which also expects to be invited to join its U.S. alliance partners Delta and Continental Airlines (NYSE:CAL - News) in SkyTeam, is quoted as saying its Dutch partner had "definitely chosen" an alliance with Air France.
You are 100 times more likely to catch a cold on a flight than an average person!
 
Jacques60
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 10:45 pm

What I just heard over the radio this lunch time was : AF going to buy 100% of KLM....which would then hold 15% of the new entity.
To me this seems just another journalistic bla-bla !

Cyril B : I never heard the French Govt saying that AF would ever be 100% privatized.
 
Goose
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 10:47 pm

just like one airline with two liveries. from an economic point of view not the most sensible solution, but "Air France" does neither represent a dutch or a truly european airline...

I think some Frenchmen might well disagree with you.....  Big grin I've met a number of French who believe that the French are the only "real" Europeans....  Insane
"Talk to me, Goose..."
 
DTWINTLFLYER
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 10:58 pm

This does not mean you won't see any KLM a/c anymore...it is financial..And yes finally everyone will see NW CO KLM CHINA SOUTHERN in SkyTeam which will make it clearly the biggest of the three alliances. I know, don't all say it at once, it isn't "official" yet. I think you will see all of the kinks worked out by the end of the year.
 
Bicoastal
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RE: AF To 'acquire' KLM

Fri Sep 12, 2003 11:57 pm

I'd like to see some renaming of European airlines...especially if the mergers and acquisitions are going to continue. In the new Europe without borders and an increasingly mobile European population living and working in "countries" other than their birth, the names of the airlines should reflect that. Economics won't support a "national" airline for each European country. The surviving mega airlines, British Airways, Air France and Lufthansa, should move forward with broader identities as well.
Airliners.net has many forums. It has spell check and search functions. Use them before posting!
 
keesje
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RE: AF To 'acquire' KLM

Sat Sep 13, 2003 12:03 am

I don't Air France will be privatizaed, they need the state to fix things and bail them out when the going gets though. However KLM demands this before any serious cooperation ...
"Never mistake motion for action." Ernest Hemingway
 
petertenthije
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RE: AF To 'acquire' KLM

Sat Sep 13, 2003 12:10 am

I'd like to see some renaming of European airlines...

Won't happen. Remember the BA World Tails fiasco. It got cancelled because it was not British enough. And that was only the tail, you are talking about the entire aircraft and even the name?


With regard to the take over,

From what I have heard at RTL-Z, not the best source of information though, KLM will be taken over for 100%. KLM will take over 15% of AF (wonder why, if AF owns 100% of KLM, they'd also own KLM' 15% share).

I am really interested who will have ownership. Will it be one airline under command of AF, or will there be two airlines. I really hope it will be the last one, it should work since it worked really good with KLM and NW.

Attamottamotta!
 
sllevin
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RE: AF To 'acquire' KLM

Sat Sep 13, 2003 4:30 am

Are European companies allowed to let the identity of that company continue even if it's technically a part of the new company?

I would assume so, as VW owns, for example, SEAT, Audi, and Bentley. KLM owned Buzz.

Steve
 
FlyingDutchBoy
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RE: AF To 'acquire' KLM

Sat Sep 13, 2003 4:47 am

KLM Brand name will stay!!!!!!!!!!!!!!!  Big thumbs up  Big thumbs up  Big thumbs up  Big thumbs up

BBC News Online

Brand identity

News of the proposed merger sent KLM's shares soaring 8.8%.

French financial newspaper L'Agefi reported on Friday that the two airlines would announce a deal on 18 September.

The boards of both companies are scheduled to meet on 17 September to discuss the deal, which will see Air France will buy 100% of KLM.

KLM shareholders will receive 15% of the French government-owned stake in Air France, L'Agefi said.

The French government will then sell 20% of its 54% stake in Air France on the market, thus reducing its stake in the combined entity to under 20%, the newspaper said.

Talks with Air France are focusing on maintaining KLM's brand, its Dutch identity, Schiphol airport as a hub and its partnership with US airlines, Mr Koster said.

for more:
http://news.bbc.co.uk/2/hi/business/3104058.stm
 
worldtraveler
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RE: AF To 'acquire' KLM

Sat Sep 13, 2003 10:14 am

I commend KL and AF for apparently pulling this off. KL particularly should be commended for recognizing that the power of the EU comes not from losing its own identify but from trading it's "Dutchness" for an even more prominent position in world aviation. Having access to the French market in the EU plus having DL, CO, and NW all pushing traffic through AMS will make KL a long term winner. Published requirements for the alliance/acquisition are that KL retain its own identify and a worldwide network at AMS so I don't think KL people should fear anything in the short-term. I could see some administrative and support functions being merged eventually but probably not for several years - partly to ensure that the Dutch gov't signs off on the deal.

BA will clearly be forced to make a major move now unless they want to see all of their US-Europe and beyond traffic get siphoned off by every other network. KL and AF will need an EU open skies agreement in order to get the full synergies of this merger (ie so KL can fly CDG-US and AF can fly AMS-US) but BA needs it far more. CO DL and NW will finally pry LHR open!!!
 
FlyingDutchBoy
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RE: AF To 'acquire' KLM

Sat Sep 13, 2003 10:40 am

Skyteam is the next best thing. Having 3 major US carriers... DL, CO and NW versus one each for OW - AA and *A - UAL. If this come to reality, hope Skyteam will seek more Asian members particularly from SE Asia, MH and GA (both recently just signed an alliance agreement/master agreement) versus *A SQ and TG memberships.

 
jwenting
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RE: AF To 'acquire' KLM

Sat Sep 13, 2003 2:26 pm

This does not mean you won't see any KLM a/c anymore...it is financial..And yes finally everyone will see NW CO KLM CHINA SOUTHERN in SkyTeam which will make it clearly the biggest of the three alliances. I know, don't all say it at once, it isn't "official" yet. I think you will see all of the kinks worked out by the end of the year.

It DOES mean NO MORE KLM.
The Air France way of takeovers is to take a majority interest in the "partner", then use that to strangle that "partner" to death diverting ever more of its operations to Air France.
A few years down the line the "partner" is declared bankrupt and Air France takes over its assets as payment of their claims to money loaned to the "partner".

Expect KLM to be no more before 2010, Schiphol to be an empty shell from around that time as well.
This would mean the destruction of 150.000-200.000 jobs in the Netherlands.
Not just KLM staff (some of whom might be offered jobs with Air France but that is doubtful as there are a lot of Frenchmen without jobs), but everyone whose business depends in large part or whole on the existence of KLM or Schiphol as a major airport will be out of a job.
I wish I were flying
 
tokolosh
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RE: AF To 'acquire' KLM

Wed Sep 17, 2003 12:18 am

"Username: Jwenting
From Netherlands, joined Apr 2001, 6949 posts, RR: 60
Reply: 7
Posted Fri Sep 12 2003 14:23:23 UTC+1 and read 1516 times:
If KLM and Air France start "cooperating" (which is what it will be told) KLM will go the way of Fokker quickly.
Corporate assassination, OK'd by the Dutch government for the sake of promises of EU jobs for government officials."


I agree with this statement and am glad you mentioned the Fokker case in this context. What I can't understand is the need for KLM, which is the 4th largest airline in Europe, to merge with Air France or British Airways. KLM has been largely profitable over the past two decades, it has a good reputation, a clear identity and has built up an amazing route network over the years. Let's also not forget that Amsterdam's Schiphol Airport (which employs 50,000 people), KLM's home base, is Europe's 4th largest hub with more than 40 million passengers a year, thanks in part to KLM. It can also boast about being the world's oldest continuously flying airline, its passenger load factors are usually quite a bit higher than its competitors and it's a big player in cargo too. Looking at it like this KLM actually has a lot going for it, so why on earth throw all your toys out of the cot?!

I'd like to refer to the example of Fokker's demise. DASA (Deutsche Aerospace) had taken a majority share of Fokker and the Dutch government also had a share. Fokker had recently launched their new range of aircraft -- F50, F70 and F100, thoroughly modern and capable aircraft, still today. At the time the dollar was undervalued compared to the guilder and yes, Fokker was making a loss because its aircraft were priced in dollars but costs were in guilders. The Dutch government refused to loan it a modest amount to pull it through and DASA of course didn't lift a finger, thereby getting rid of a competitor! Just three days after bankruptcy, it became known several major orders were in the pipeline (one of them certain!). If Fokker existed today as a manufacturer of commercial aircraft, it would be thriving in the 50-130 market (an F130 was being thought of too).

So, KLM, please learn your lesson from this and don't go into sea with Air France. They will take the best bits and drown the rest.
Did the chicken or the egg get laid first?
 
jwenting
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RE: AF To 'acquire' KLM

Wed Sep 17, 2003 12:59 am

I too cannot understand the need for KLM to 'merge' with Air France.
The cooperation with BA or AZ had they worked out would have been profitable in that it would have opened up markets where KLM is traditionally weak, but a merger with AF does not lead to anything except destruction.

KLM has suffered a single year of operational losses (and those minor) in the last 40 years or more.
That year was FY2002-2003, in which they were plagued by the economic crisis and SARS epedemic in Asia (traditionally an important market for KLM).
Even in FY2001-2002 when most of the worlds' airlines ran into losses KLM made a (small) profit.
The 2002-2003 loss is in part caused by 2 strikes by ground staff, each of which ate in a few days the profits made (and they were there) during the entire preceding quarter.

I THINK the government is trying to pull another Fokker on KLM, selling out the airline to a competitor for a bit of quick cash and a few promises of fat jobs in Brussels.
While they don't have total control they control enough of the company to sway any vote AND they're the regulator who has to approve the deal.
I wish I were flying
 
Flying_Tuur
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RE: AF To 'acquire' KLM

Wed Sep 17, 2003 1:10 am

Looks so much like the 'partnership' between Swissair and Sabena. AF will probably take the most profitable routes from KLM. Take the business passengers on the AF routes because they all leave just 30 minutes earlier while KLM has to wait for passengers from AF and KLM who missed their connection, etc> etc.

Aviation is a hard business, dog eat dog... Don't expect AF to be nice to KLM, they just want the assets they can use, and throw the rest away...
 
tokolosh
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RE: AF To 'acquire' KLM

Wed Sep 17, 2003 1:14 am

Indeed. Let's hope there are enough sensible heads on the decision-makers' shoulders at KLM and in government to stop a deal with Air France, like happened when the British Airways tie-up didn't go through. British Airways arrogantly wanted to call all the shots (e.g. best slots, routes, etc). I fear Air France will have the same attitude.
Thanks for clarifying the KLM profit facts. I would call it a very successful and consistent airline compared to most!
Did the chicken or the egg get laid first?

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