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PatrickZ80
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Pieter Elbers to step down as CEO of KLM

Thu Jan 13, 2022 5:25 pm

Source: https://www.luchtvaartnieuws.nl/nieuws/ ... an-van-klm (in Dutch)

At May 1st 2023 Pieter Elbers will quit his job as CEO of KLM, he has been at the head of KLM for over 8 years and says it's time for a change. It's unknown who will replace him.
Last edited by atcsundevil on Fri Jan 14, 2022 1:41 am, edited 1 time in total.
Reason: Edited title for clarity
 
DALCE
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Re: Pieter Elbers to stop as CEO of KLM

Thu Jan 13, 2022 5:38 pm

Very smart to step down now. Rough roads are ahead for KLM with all the debts and governmental interferences both in Holland and France.
He’ll get a nice new job somewhere!
 
PANAMsterdam
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Re: Pieter Elbers to stop as CEO of KLM

Thu Jan 13, 2022 6:56 pm

Probably a shock to many KLM-staffers as he stood up for his people more than once and he was well liked among them. I'm curious who will be his successor and what that will do with the relationship between KLM and "Paris".
 
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mercure1
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Re: Pieter Elbers to stop as CEO of KLM

Thu Jan 13, 2022 7:03 pm

Hopefully, the group appoints a CEO at KLM that can champion further synergies within the group which Ben Smith has been pushing, and avoid company to company divisiveness.
 
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Dutchy
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Re: Pieter Elbers to stop as CEO of KLM

Thu Jan 13, 2022 7:21 pm

Ellbers was the right CEO for KLM and he did very well for the airline. In 2019, when he was up. for a second term, he was almost replaced by Paris, then the staff intervened and he got his second term. Back then, it was quite clear that that would be his last and there it is.

Will be a bumpy road ahead for KLM, the 'fight' with Air France isn't over and the next CEO might be more Paris 'minded'.
 
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PatrickZ80
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Re: Pieter Elbers to stop as CEO of KLM

Thu Jan 13, 2022 8:33 pm

PANAMsterdam wrote:
Probably a shock to many KLM-staffers as he stood up for his people more than once and he was well liked among them. I'm curious who will be his successor and what that will do with the relationship between KLM and "Paris".


The name of Pieter Bootsma is being rumored, no guarantees of course but I think it would be good for the stability of KLM. He knows the company and of course as a Dutchman he can stand up against too much French influence. That seems to be the major concern among KLM staff, they don't want to be governed by Air France. KLM is and should remain a Dutch company.

4 years ago Air France-KLM initially didn't want to prolong Elbers as CEO of KLM, they wanted someone who was more Paris minded. However the KLM staff massively stood up for Elbers, they wanted him and nobody else. And thus his contract was prolonged. Now Elbers himself chooses not to go for another term at KLM. But Bootsma shares his vision, I'm sure if the KLM staff would have it their way they'd appoint Bootsma to replace Elbers. But it remains to be seen what the Air France-KLM will do, what their proposal will be.
 
Eikie
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Re: Pieter Elbers to stop as CEO of KLM

Thu Jan 13, 2022 8:43 pm

PatrickZ80 wrote:
PANAMsterdam wrote:
ProbablyNow Elbers himself chooses not to go for another term at KLM.

Are you sure it is his choice? Or.not at least influenced?
 
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LAXintl
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Re: Pieter Elbers to stop as CEO of KLM

Thu Jan 13, 2022 11:55 pm

As someone that has business relations with AFKL, I have long espoused the idea they need to integrate closer, stop duplication, and function more as joint airlines in the group.

Its truly amazing, nearly 20 years after their "merger" there is very little to show for it synergy-wise, as there is so much overlap and waste created when a smaller partner like KLM for instance does not avail itself to broader capabilities that the group has.

Look to LH Group, where much of the back office, support functions, and decision-making is centralized across airlines at great savings and avoids each partner having to carry the burden on their own. KLM can fly the Dutch flag on the brand, but internally it should really function more on the joint group level imo.
 
FGITD
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Re: Pieter Elbers to stop as CEO of KLM

Fri Jan 14, 2022 12:18 am

LAXintl wrote:
As someone that has business relations with AFKL, I have long espoused the idea they need to integrate closer, stop duplication, and function more as joint airlines in the group.



This is the truth. In my airline career I’ve worked in close proximity to many airlines and known how they work together within a group. AF KL are definitely extremely generous in the “let KLM be Dutch!” aspect. There’s absolutely no reason to have 2 different systems for almost everything. Usually there’d be a fairly modern, well supported program used by AF. Then there’d be a legacy system that hasn’t been updated since 1999 used by KL, but every attempt to get rid of it and integrate would be met with over the top resistance from long time KL employees.

It does swing both ways however. Sometimes AF would have procedures that were time consuming and questionably useful. KL on the other hand would have long since eliminated that procedure to streamline things.

I’m all for KLM and AF representing the Dutch and French, but it’s time to make it one ship.
 
krisyyz
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Re: Pieter Elbers to stop as CEO of KLM

Fri Jan 14, 2022 1:23 am

As an amateur enthusiast who has probably flown KLM over 25 times, my biggest concern is what possible further integration may mean for KL. I personally know of several Europeans expatriates who are devote KL customers. Their staff are amazing, AMS is a great hub to connect through and their soft product is far beyond the US 3, BA, LH, AC, SX and AF in Y, IMO. I’ve had horrible experiences with AF but nothing but good experiences with KL. If that changes, and the staff become disgruntled and service suffers, KL will loose a lot of frequent flyers.

I have absolutely no proof just a gut feeling, but I wonder if Ben Smith, the pandemic and the recent Airbus A32X order had a role to play in his departure. Elbers clearly and repeatedly said that KL’s long term plan is to be all Boeing, there were credible reports in the fall that Boeing got the NB deals. I have to wonder if AF and Smith overwrote KLs fleet strategy and thereby upset their CEO. I’m not claiming the A32X won’t do very well at KL, it’s an impressive aircraft.

KrisYYZ
 
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MrBren
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 6:39 am

Hopefully Transavia NL and Transavia FR will finally merge.
 
PvdE
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 7:12 am

Last summer I flew from Paris to Amsterdam on an AF flight in the evening. Paris was a stopover on my way home from Dubai. We were already above Amsterdam when there was a technical issue. The aircraft flew back to have it fixed in Paris. Obviously this is because it was a A320 where KLM has B737, or maybe the crew didn't want to get stranded in Amsterdam, but the idea that an AF-KLM aircraft flying into one the main AF-KLM hubs can't be repaired there is really crazy.
 
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PatrickZ80
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Re: Pieter Elbers to stop as CEO of KLM

Fri Jan 14, 2022 8:51 am

FGITD wrote:
I’m all for KLM and AF representing the Dutch and French, but it’s time to make it one ship.


As long as that one ship is under Dutch management I'm all for that, however I'm afraid the French won't accept that. And the Dutch on their turn won't accept it to be under French management.

Instead of making it one ship, maybe it's time for a divorce. At the time Air France was the best option for KLM, but that doesn't have to mean that's still the case. They never got along very well and even after all these years there are still calls for KLM to become independent again. There's nothing wrong in cooperation with other airlines, they can both remain SkyTeam members and they can even be in a joint venture. However merger is a bridge too far, the time to make it one ship hasn't come yet. In fact I think that time will never come.
 
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InnsbruckFlyer
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 9:30 am

MrBren wrote:
Hopefully Transavia NL and Transavia FR will finally merge.


Aren't they basically the same apart from their AOCs?
 
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frigatebird
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Re: Pieter Elbers to stop as CEO of KLM

Fri Jan 14, 2022 12:01 pm

LAXintl wrote:

Look to LH Group, where much of the back office, support functions, and decision-making is centralized across airlines at great savings and avoids each partner having to carry the burden on their own. KLM can fly the Dutch flag on the brand, but internally it should really function more on the joint group level imo.


The Lufthansa scenario is exactly the nightmare scenario KLM employees, Dutch government and people have. Just like LH decides everything for SN Brussels, Austrian and Swiss but will make sure all the lucrative destinations, newest efficient aircraft and profitable business are kept for Germany and Lufthansa, people in The Netherlands think that same thing will happen if France gets too much influence in KLM. Whether these people are right or wrong I can't tell, but a lot of emotion is involved. Fear that more integration will result a shift of profitable business and employment going from AMS to CDG for example, and the latest Airbus order doesn't exactly help removing these fears: will AMS/KLM keep a maintenance base or will everything go to CDG, where AF already has the AF Airbus maintenance.

As said, whether these sentiments are correct or not I don't know, but many people including in the Dutch government believe AF really wants to use KLM's profits to cover for the inefficiencies of AF. Therefore every attempt for further integration is blocked.
 
Berven1
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 12:10 pm

MrBren wrote:
Hopefully Transavia NL and Transavia FR will finally merge.

It could well be that Transavia will once again become one large low-cost airline that will soon fly with Airbuses. In itself it is conceivable that new large Transavia can compete better with Wizzair, Ryanair, Easyjet, Veuling and other smaller low-cost airlines. At some point, I think that this step will also allow us to gain a large market share from smaller companies. It is not wrong that it could happen that it can also strengthen the position of AirFrance-KLM by having one large low-cost airline instead of 2 smaller airlines
 
RalXWB
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 12:14 pm

PvdE wrote:
Last summer I flew from Paris to Amsterdam on an AF flight in the evening. Paris was a stopover on my way home from Dubai. We were already above Amsterdam when there was a technical issue. The aircraft flew back to have it fixed in Paris. Obviously this is because it was a A320 where KLM has B737, or maybe the crew didn't want to get stranded in Amsterdam, but the idea that an AF-KLM aircraft flying into one the main AF-KLM hubs can't be repaired there is really crazy.


Well that problem won´t exist for any longer since the group decided on one main NB type.
 
Flanker7
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 12:33 pm

The blue army had sprung into action with a petition to keep Elbers. The overwhelming reactions are disbelief that he's leaving. Personally I think it's as shame he's going and feel that BS had a hand in this, like I said my personal feeling.
 
Clery
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Re: Pieter Elbers to stop as CEO of KLM

Fri Jan 14, 2022 12:52 pm

frigatebird wrote:
LAXintl wrote:
As said, whether these sentiments are correct or not I don't know, but many people including in the Dutch government believe AF really wants to use KLM's profits to cover for the inefficiencies of AF. Therefore every attempt for further integration is blocked.

Let's remember that the merger happened in the first place because KLM had strong difficulties and needed to avoid bankrupcy. Later on, when Air France started having its own difficulties the Dutch government made it clear they refused KLM to be used for help in increasing their shares in the group, a decision which has shocked the French side, which retaliated if I remember correctly.

From a pure business point of view, the group should have further integrated already, what's preventing it to happen are more geopolitical and attractiveness reasons. Both flag carriers are more than only private companies for the Netherlands and France. They drive the growth of AMS and CDG which are the main gates for business in the Netherlands and Paris. Both airports are also in competition as being 2 of the 4 major hubs in Western Europe together with LHR and FRA.

I think this explains why distrust is so strong between both sides, and particularly why the Dutch side considers essential for KLM not to downgrade as an AF subsidiary. But yes, clearly the consequence is that both entities within the group are more competitors than real partners.
 
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frigatebird
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 1:06 pm

RalXWB wrote:
PvdE wrote:
Last summer I flew from Paris to Amsterdam on an AF flight in the evening. Paris was a stopover on my way home from Dubai. We were already above Amsterdam when there was a technical issue. The aircraft flew back to have it fixed in Paris. Obviously this is because it was a A320 where KLM has B737, or maybe the crew didn't want to get stranded in Amsterdam, but the idea that an AF-KLM aircraft flying into one the main AF-KLM hubs can't be repaired there is really crazy.


Well that problem won´t exist for any longer since the group decided on one main NB type.

That doesn't guarantee there will be a maintenance base for the A32x in AMS.
 
marcelh
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Re: Pieter Elbers to stop as CEO of KLM

Fri Jan 14, 2022 1:12 pm

PatrickZ80 wrote:
FGITD wrote:
I’m all for KLM and AF representing the Dutch and French, but it’s time to make it one ship.


As long as that one ship is under Dutch management I'm all for that, however I'm afraid the French won't accept that. And the Dutch on their turn won't accept it to be under French management.

Instead of making it one ship, maybe it's time for a divorce. At the time Air France was the best option for KLM, but that doesn't have to mean that's still the case. They never got along very well and even after all these years there are still calls for KLM to become independent again. There's nothing wrong in cooperation with other airlines, they can both remain SkyTeam members and they can even be in a joint venture. However merger is a bridge too far, the time to make it one ship hasn't come yet. In fact I think that time will never come.

IMHO you are just looking too much though chauvinistic orange glasses. We Dutch think we are bigger/more important than we really are. More integration can be possible without “destroying” the identity of KLM. KLM is wat less Dutch than the Dutch want to believe…..
 
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GCT64
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 1:27 pm

Rather than internal wranglings, AFKL might be better worrying about their relative position / value against the competition.

Mkt caps of the main European airline groups (all in USD):

Ryanair = $26.5Bn
IAG (BA/IB/EI/VY etc.) = $11Bn
LH (+ OS/SN/LX etc.) = $9.9Bn
WIZZ = $7.9Bn
EZY = $6.5Bn
AFKL = $3Bn

Basically, if AF & KL split, each would be worth about the same as Norwegian, AZUL or Finnair (i.e. minor players).
To put AFKL's market cap in wider context, DL and WN are both worth about 10 X AFKL.
 
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Aesma
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 1:57 pm

Yesterday on a French business radio they said he was basically fired because he clashed too much with Ben Smith... I'm surprised to learn that means staying a year and a half before going.

To some commenters here, last time I checked Ben Smith isn't French, he doesn't even speak French (for a Canadian). Well he speaks some French now.
 
MIflyer12
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 1:57 pm

GCT64 wrote:
Rather than internal wranglings, AFKL might be better worrying about their relative position / value against the competition.

Mkt caps of the main European airline groups (all in USD):

Ryanair = $26.5Bn
IAG (BA/IB/EI/VY etc.) = $11Bn
LH (+ OS/SN/LX etc.) = $9.9Bn
WIZZ = $7.9Bn
EZY = $6.5Bn
AFKL = $3Bn

Basically, if AF & KL split, each would be worth about the same as Norwegian, AZUL or Finnair (i.e. minor players).
To put AFKL's market cap in wider context, DL and WN are both worth about 10 X AFKL.


What do you think drives market cap? It's expectation of earnings. AFKL needs to get on with the rationalization of duplication so it can start making more money. We don't see AA operating America West, USAirways, and Reno Air as separate subsidies. KLM shareholders accepted the deal. It's way past time to get on with it.
 
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GCT64
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 2:04 pm

MIflyer12 wrote:
GCT64 wrote:
Rather than internal wranglings, AFKL might be better worrying about their relative position / value against the competition.

Mkt caps of the main European airline groups (all in USD):

Ryanair = $26.5Bn
IAG (BA/IB/EI/VY etc.) = $11Bn
LH (+ OS/SN/LX etc.) = $9.9Bn
WIZZ = $7.9Bn
EZY = $6.5Bn
AFKL = $3Bn

Basically, if AF & KL split, each would be worth about the same as Norwegian, AZUL or Finnair (i.e. minor players).
To put AFKL's market cap in wider context, DL and WN are both worth about 10 X AFKL.


What do you think drives market cap? It's expectation of earnings. AFKL needs to get on with the rationalization of duplication so it can start making more money. We don't see AA operating America West, USAirways, and Reno Air as separate subsidies. KLM shareholders accepted the deal. It's way past time to get on with it.


I'm not even sure AFKL has got a culture of focusing on making money (let alone actually achieving it!!) - we all know that Ryanair, Wizz and Easyjet do and do. The whole talk of "maintaining the Dutch independence from Paris, keeping a CEO who focuses on not getting integrated etc." doesn't suggest there is a laser focus on the business' performance.
 
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frigatebird
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 2:17 pm

Aesma wrote:
Yesterday on a French business radio they said he was basically fired because he clashed too much with Ben Smith... I'm surprised to learn that means staying a year and a half before going.

These kind of triumphant comments from France will only result in more oil on the fire for the anti France sentiments in The Netherlands and particularly within KLM - Elbers still is hugely popular with the KL employees at all levels.
 
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ojjunior
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 2:52 pm

Just out of curiosity.
Does anyone know how much does someone in such position earns?
 
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GCT64
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 3:07 pm

ojjunior wrote:
Just out of curiosity.
Does anyone know how much does someone in such position earns?


"Elbers earns €525,000 a year plus a maximum bonus of up to 75% of that"

according to https://www.dutchnews.nl/news/2020/04/k ... of-salary/

(GIYF - Google Is Your Friend)
 
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airporthistory
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 4:06 pm

The French bought KLM. People shouldn't be surprised that they actually want to have something to say about it.
 
Clery
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 4:09 pm

GCT64 wrote:
I'm not even sure AFKL has got a culture of focusing on making money (let alone actually achieving it!!) - we all know that Ryanair, Wizz and Easyjet do and do. The whole talk of "maintaining the Dutch independence from Paris, keeping a CEO who focuses on not getting integrated etc." doesn't suggest there is a laser focus on the business' performance.

Ben Smith has been named CEO exactly to change that. He was acclaimed for his track records as Air Canada's CEO and took his position at AFKL with the objective to do the very same, only at a larger scale. His primary ambition from start has always been to better integrate AF and KL. I remember gossips about his intent to make of KLM a low-cost company which generated outcries in Amsterdam, leading instead to focus his low-cost strategy in developing Transavia.

You raised an important point in highlighting how much AFKL is under-capitalized, particularly in comparison to its regional rivals IAG and LH. Business is business and neither AF nor KL will be able to survive without better perspectives of growth in the long term.
 
B787oftheworld
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 4:20 pm

This outcome was obvious when he chose Neo over Max
 
Opus99
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 6:06 pm

B787oftheworld wrote:
This outcome was obvious when he chose Neo over Max

I don’t think he was the one that chose NEO or MAX
 
panamair
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 6:16 pm

Aesma wrote:
To some commenters here, last time I checked Ben Smith isn't French, he doesn't even speak French (for a Canadian). Well he speaks some French now.


He spoke French before he joined AFKL..he didn’t just learn it when he became CEO..
 
jpiddink
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 6:57 pm

I’m still a bit surprised by all the comments stating “it would have made business sense to merge them more closely”. That sounds like a disqualification of AFKL management by an armchair director. What makes business sense is doing what’s necessary to keep your company alive and profitable.

Obviously, 20 years of AFKL management were convinced that integrating the companies more would not be a good idea. Whether because staff would protest or because the synergy benefits between such two completely different cultures would be limited. One can even imagine that different payment and labour conditions would each have been tailored to fit the company where they are applicable, but cannot easily be transferred. Transavia is obviously the odd part in that equation.

One thing I cannot believe however, is that a (France-oriented) AFKL board of directors would consider a further/full integration as business sense, but would shy away from the initiative in fear of strikes.

It’s hard to reflect on the announcement of his leaving without noticing the Airbus order that was just announced. Could be a coincidence but I reckon that there was probably a link between the two decisions.
 
RalXWB
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 7:01 pm

B787oftheworld wrote:
This outcome was obvious when he chose Neo over Max


Any CEO ordering Airbus should resign? Is this the Statement of your Post?
 
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PatrickZ80
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 7:59 pm

airporthistory wrote:
The French bought KLM. People shouldn't be surprised that they actually want to have something to say about it.


No, they didn't.

The two airlines merged, they agreed to both having a controlling position in the new formed parent company.

MIflyer12 wrote:
What do you think drives market cap? It's expectation of earnings. AFKL needs to get on with the rationalization of duplication so it can start making more money. We don't see AA operating America West, USAirways, and Reno Air as separate subsidies. KLM shareholders accepted the deal. It's way past time to get on with it.


The problem is that the French want to move certain activities, such as maintenance, to France even though the Dutch do this better and more efficient. Logically the Dutch won't let that happen, it should be done where it's done best. And that happens to be in the Netherlands, not in France. However the French refuse to accept that, they want it done in France.

The reason it's done different in America is because America is a different world, a different market. The European market is nothing like the American market, here in Europe national identity is important. Even more important than money. In America it might make sense to drop the smaller brands, in Europe it doesn't.

The shareholders have agreed to the deal that was made back then, that much is true. However that deal grants autonomy for KLM, that was a condition under which the deal was signed. By withdrawing that autonomy, you lose the support of the shareholders. They don't want further integration, it says so in the deal that was signed back then.
 
FGITD
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Re: Pieter Elbers to step down as CEO of KLM

Fri Jan 14, 2022 9:01 pm

I would contend that KLM would actually be worse off without AF, primarily because they are too small to live on their own. They’d get taken up by IAG, or Lufthansa…and then there would be absolutely no point in negotiating how to keep the company Dutch. As soon as it made financial sense, everything would be centralized out of AMS.

I think the talk of integration is difficult because most of the practical implications of it are in areas that wouldn’t be visible to the public. But in what world does it make sense that you can have an AF and KL 77w parked next to each other, but every subcontractor handling those flights is different-there are 2 different load control centers, 2 central controls, 2 different sets of IT systems being used, etc.

That’s what I’m referring to. Sure a more combined Management would be good too, but there are many other ways
 
AngMoh
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Re: Pieter Elbers to step down as CEO of KLM

Sat Jan 15, 2022 1:22 am

PatrickZ80 wrote:
airporthistory wrote:
The French bought KLM. People shouldn't be surprised that they actually want to have something to say about it.


No, they didn't.

The two airlines merged, they agreed to both having a controlling position in the new formed parent company.

MIflyer12 wrote:
What do you think drives market cap? It's expectation of earnings. AFKL needs to get on with the rationalization of duplication so it can start making more money. We don't see AA operating America West, USAirways, and Reno Air as separate subsidies. KLM shareholders accepted the deal. It's way past time to get on with it.


The problem is that the French want to move certain activities, such as maintenance, to France even though the Dutch do this better and more efficient. Logically the Dutch won't let that happen, it should be done where it's done best. And that happens to be in the Netherlands, not in France. However the French refuse to accept that, they want it done in France.

The reason it's done different in America is because America is a different world, a different market. The European market is nothing like the American market, here in Europe national identity is important. Even more important than money. In America it might make sense to drop the smaller brands, in Europe it doesn't.

The shareholders have agreed to the deal that was made back then, that much is true. However that deal grants autonomy for KLM, that was a condition under which the deal was signed. By withdrawing that autonomy, you lose the support of the shareholders. They don't want further integration, it says so in the deal that was signed back then.


AF and KL merged in 2004, 18 years ago. At that time the French government owned 54% of AF before merger and 44% of the combined AF/KL shares after merger so the combined entity was French dominated whether you like it or not (AF was roughly 80% of the combined entity and KL 20%). A merger of equals is just a Dutch dream. Many business have at least 3-5 major re-organisations in an 18 year period, so if you expect AF/KL to be immune to that it is also unrealistic.

Ben Smith seems to be the first sensible CEO they have and he is annoying both AF and KL by demanding common sense over nationalistic behaviour. It is going to cost jobs at both sides (this should have been done 18 years ago) and nobody will be happy. But sooner or later someone had to do it.

As others have mentioned, if KL would have merged with Lufthansa or British Airways, the integration would have been a lot more ruthless. Look at how Lufthansa is treating Swiss, Austrian, Brussels Airlines and others. Absolutely everything is decided in Germany. AF has been very nice to KL all those years. While the KLM brand will stay, the back end operations need to be merged but that should not be visible to the flying public. The strength of KL is the ease of transit of the AMS airport, not the KL brand.
 
B777LRF
Posts: 2933
Joined: Sun Nov 02, 2008 4:23 am

Re: Pieter Elbers to step down as CEO of KLM

Sat Jan 15, 2022 10:07 am

GCT64 wrote:
Rather than internal wranglings, AFKL might be better worrying about their relative position / value against the competition.

Mkt caps of the main European airline groups (all in USD):

Ryanair = $26.5Bn
IAG (BA/IB/EI/VY etc.) = $11Bn
LH (+ OS/SN/LX etc.) = $9.9Bn
WIZZ = $7.9Bn
EZY = $6.5Bn
AFKL = $3Bn

Basically, if AF & KL split, each would be worth about the same as Norwegian, AZUL or Finnair (i.e. minor players).
To put AFKL's market cap in wider context, DL and WN are both worth about 10 X AFKL.


Market capitalisation is an utterly useless matrix. As examples I give you Enron, Nikola Trucks and Theranos - all highly valued by Wall Street, but they were ultimately all frauds. Market cap. represents the value brokerages, investment banks and others, who add zero value to society, think they can extract from a company, nothing more or less.
 
Flanker7
Posts: 569
Joined: Thu Aug 07, 2008 4:38 pm

Re: Pieter Elbers to step down as CEO of KLM

Sat Jan 15, 2022 11:03 am

AngMoh wrote:
PatrickZ80 wrote:
airporthistory wrote:
The French bought KLM. People shouldn't be surprised that they actually want to have something to say about it.


No, they didn't.

The two airlines merged, they agreed to both having a controlling position in the new formed parent company.

MIflyer12 wrote:
What do you think drives market cap? It's expectation of earnings. AFKL needs to get on with the rationalization of duplication so it can start making more money. We don't see AA operating America West, USAirways, and Reno Air as separate subsidies. KLM shareholders accepted the deal. It's way past time to get on with it.


The problem is that the French want to move certain activities, such as maintenance, to France even though the Dutch do this better and more efficient. Logically the Dutch won't let that happen, it should be done where it's done best. And that happens to be in the Netherlands, not in France. However the French refuse to accept that, they want it done in France.

The reason it's done different in America is because America is a different world, a different market. The European market is nothing like the American market, here in Europe national identity is important. Even more important than money. In America it might make sense to drop the smaller brands, in Europe it doesn't.

The shareholders have agreed to the deal that was made back then, that much is true. However that deal grants autonomy for KLM, that was a condition under which the deal was signed. By withdrawing that autonomy, you lose the support of the shareholders. They don't want further integration, it says so in the deal that was signed back then.


AF and KL merged in 2004, 18 years ago. At that time the French government owned 54% of AF before merger and 44% of the combined AF/KL shares after merger so the combined entity was French dominated whether you like it or not (AF was roughly 80% of the combined entity and KL 20%). A merger of equals is just a Dutch dream. Many business have at least 3-5 major re-organisations in an 18 year period, so if you expect AF/KL to be immune to that it is also unrealistic.

Ben Smith seems to be the first sensible CEO they have and he is annoying both AF and KL by demanding common sense over nationalistic behaviour. It is going to cost jobs at both sides (this should have been done 18 years ago) and nobody will be happy. But sooner or later someone had to do it.

As others have mentioned, if KL would have merged with Lufthansa or British Airways, the integration would have been a lot more ruthless. Look at how Lufthansa is treating Swiss, Austrian, Brussels Airlines and others. Absolutely everything is decided in Germany. AF has been very nice to KL all those years. While the KLM brand will stay, the back end operations need to be merged but that should not be visible to the flying public. The strength of KL is the ease of transit of the AMS airport, not the KL brand.


The strength is its crew and therefore also the brand and yes Schiphol plays a part. To say that the brand plays no role is somewhat shortsighted.

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