kl911
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Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:01 pm

KLM CEO Camiel Eurlings has just resigned with immediate effect. Investors are far from happy how he handled the Air France strike this month.

The story in the financial world is this : Since the 'merger' in 2004 KLM was responsible for 2,98 Billion euro in profit, where as AF was responsible for a loss of 791 million Euro. This last strike not counted, which will be several hundreds of millions of Euro more.

The real story/rumour in investment land is that since investors don't care about nationalism and borders, that KLM will be bought back, which will then leave AF with a huge debt, and no real possibility to survive/recover due to current French politics and most of all the militant unions.

What are your thoughts? What is the share the Dutch government still owns in KL?
 
kiwiandrew

RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:08 pm

My understanding is that there are no shares in KLM to buy back....KLM shares no longer exist there are only shares in Air France/KLM. I suppose, if the majority of shareholders in that company agreed then a 'demerge' could happen....but I'm not sure why they'd agree to it. I think the process would be less difficult than trying to unscramble an egg....but still pretty messy.

[Edited 2014-10-15 12:10:01]
 
bennett123
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:15 pm

Not sure how the KLM CEO is responsible for the AF strike.
 
kl911
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:15 pm

Quoting kiwiandrew (Reply 1):
There are no shares in KLM to buy back.....there are only shares in Air France/KLM.

Well, the shares are in the AF/KL holding/group, under which both airlines still operate independently , so , and i'm no expert, that group controls both and a majority of stockholders could vote to dissolve the group and leave both companies alone in their own.
This is expensive, KLM lost 250 million euro when cancelling the merger with AZ long time ago.

But i'm afraid if AF doesn't get the unions under control, and even the government cant, they investors will not sit still.

Add to that the uncertainty of the EU most likely rejecting the French budget for 2015, this country is far from stable.
 
kl911
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:19 pm

Quoting bennett123 (Reply 3):
Not sure how the KLM CEO is responsible for the AF strike.

It's being reported that he is being critised for not acting/commenting at all, he was only saying that its a French issue and he would prefer not to get involved.

But yes, I would love to hear the official reason of his immediate departure too.
 
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EPA001
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:20 pm

Quoting kl911 (Thread starter):
KLM CEO Camiel Eurlings has just resigned with immediate effect. Investors are far from happy how he handled the Air France strike this month.

That is a surprising move as he was only in office since mid-2013. I wonder what consequences this move might have.
 
kl911
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:30 pm

Quoting EPA001 (Reply 6):
That is a surprising move as he was only in office since mid-2013. I wonder what consequences this move might have.

Some more info from the tv news : He was not defending the Dutch interests, and the board of directors ( of KLM ) agreed/told him to go. Not confirmed yet though.
His term was to end or renewed April 2015 anyway.
 
dennys
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:34 pm

That could be The best décision for KLM ; No 320 , no 380
May be 747-8i , and no more bloody strikes !
 
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northwestEWR
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:39 pm

I am all for this--let KLM be successful on their own without the dead weight of AF dragging them down. PLEASE let this be true.

Those numbers are pretty shocking. Billions in profit from KL, millions lost by AF.
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A388
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:39 pm

Yes, I'm also surprised to see him leave after such a short period as CEO. According to the luchtvaartnieuws.nl website Mr. Eurlings' position was under pressure for some time now. I can imagine that KL would want to leave AF if their profitability has been suffering since it joined forces with AF but I just don't have that information so I don't know what scenario's there are. Nonetheless, interesting developments. Let's see what will happen.

A388
 
LJ
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:43 pm

Quoting kl911 (Thread starter):
What are your thoughts? What is the share the Dutch government still owns in KL?

None. KLM is economically fully owned by AF/KL. However, AF/KL does not have 100% of the voting rights. The majority (51%) of the voting rights are at trusts and the Dutch government (5.62%). Do note that AF/KL owns all of the priority shares which means that they control the management board and the general meeting of shareholders.
 
kl911
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:47 pm

Quoting LJ (Reply 11):
None. KLM is economically fully owned by AF/KL. However, AF/KL does not have 100% of the voting rights. The majority (51%) of the voting rights are at trusts and the Dutch government (5.62%). Do note that AF/KL owns all of the priority shares which means that they control the management board and the general meeting of shareholders.

But I vaguely remember the Dutch government keeping a 'golden' vote for something. Is that still current?
 
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par13del
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:47 pm

Not going to happen, now if the Dutch want to force the issue, I'm sure the parent company would be quite willing to spin off KLM from the group for the small price which by coincidence would cover the AF losses for the last couple years along with a hefty chunk of the strike loss.
Now is KLM really worth that much?
 
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:49 pm

This could be catastrophic for AF but great for KLM, I think after the merger KLM has done a great restructuration and rebuild the brand in an excellent way, however AF is going from bad to worse and I don´t see any solutions in the short term.

If KLM leaves AF, would they also leave Skyteam and join another alliance??

A few days ago we were talking about VS joining Skyteam, so if KLM leaves AF maybe they can approach VS and join forces on AF-VS-DL-AZ joint venture.

Quoting dennys (Reply 8):
That could be The best décision for KLM ; No 320 , no 380
May be 747-8i , and no more bloody strikes !

I don´t even think we will see the B748 in KLM colours, the B77W is doing great and the mix with the A330 family makes a perfect complement, I think we will see the B779 in the future.
 
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:54 pm

In the theoratical situation that KLM would split from AF, both airlines could still joint-venture and codeshare heavily like they do now.
If this still unlikely scenario would happen, then Delta is the most logical candidate to invest in KLM (and AMS.)
KLM will need a big partner any how.
But we cant really speculate with any sense about this really.
No one here knows what is technically and financially and politically possible.
The French wont accept a split of course.
What does seems inevitable is that if AF doesnt get its act together fast the chaos will be complete in the coming year.

[Edited 2014-10-15 12:56:16]
 
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 7:59 pm

The sad thing about this whole mess is that KLM and AF can actually be really strong together.
 
kl911
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 8:00 pm

Interesting idea,

Quoting migair54 (Reply 14):
If KLM leaves AF, would they also leave Skyteam and join another alliance??

A few days ago we were talking about VS joining Skyteam, so if KLM leaves AF maybe they can approach VS and join forces on AF-VS-DL-AZ joint venture.

Interesting idea, EY and KL are cooperating a lot, could EY offer anything here?
 
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 8:04 pm

Quoting kl911 (Reply 17):

Whatever happens with AFKLM, I dont see Delta and KLM splitting.
KLM and AMS are too important for Delta. And Delta is too important for KLM.
 
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 8:06 pm

Quoting kl911 (Reply 12):
But I vaguely remember the Dutch government keeping a 'golden' vote for something. Is that still current?

No the Dutch government own class A preference shares, which gives them, according to their annuhal report, voting rights at the AGM (1 vote per share). The issuance of shares (which would be applicable when having a "golden share") can only be put to the AGM with approval by AF/KL.
 
kl911
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 9:56 pm

Quoting Amsterdam (Reply 18):
Whatever happens with AFKLM, I dont see Delta and KLM splitting.
KLM and AMS are too important for Delta. And Delta is too important for KLM.

Nobody said anything about leaving skyteam. Just back to two independent companies. Both in Skyteam. But of topic, EY would be a logic member.
But the purpose of the post is more to highlight how vulnerable AF is being hijacked by unions and government.
 
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 11:30 pm

The government didn't hijack anything, on the contrary it condemned the strike and supported De Juniac. Frankly people (and I include myself into the people) don't even understand how the pilots got anything from that strike, it looked like some backdoor blackmailing was going on.

Quoting kl911 (Reply 4):
Well, the shares are in the AF/KL holding/group, under which both airlines still operate independently , so , and i'm no expert, that group controls both and a majority of stockholders could vote to dissolve the group and leave both companies alone in their own.
This is expensive, KLM lost 250 million euro when cancelling the merger with AZ long time ago.

The problem is that there is only one stock, so if stockholders did split AFKLM, they would then own both airlines anyway, and wouldn't fare better (probably worse).

Quoting kl911 (Reply 4):
Add to that the uncertainty of the EU most likely rejecting the French budget for 2015, this country is far from stable.

The EU can't reject the French budget, only the National Assembly can.
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 11:35 pm

Quoting Amsterdam (Reply 18):
Whatever happens with AFKLM, I dont see Delta and KLM splitting.
KLM and AMS are too important for Delta. And Delta is too important for KLM.

Which makes me think the AMS-SLC route planned for May by DL is a preemptive strike should a divorce happen   SLC-CDG goes by the wayside.
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RE: Rumour : KLM Could Leave Air France

Wed Oct 15, 2014 11:46 pm

Quoting SLCUT2777 (Reply 22):

Not in the cards.

AF/KL aren't splitting up. Delta isn't planning for such.
 
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 12:09 am

What is the mechanism for this? It is simply unprecedented so far along into a 'merger.'

Besides the CEO leaving, is there anything more?

Quoting kl911 (Reply 4):
This is expensive, KLM lost 250 million euro when cancelling the merger with AZ long time ago.

This would be billions more.


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kl838
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 12:11 am

Air France has some serious issues ahead, and the recent strike made it a very public display as to how the unions have control over the management. I don't know what the real reason is, but the reasons stated were absolutely ridiculous. Air France needs to adapt to the changing market place or end up like Pan Am. If their product and service standards are as good as their marketing, they could give some serious competition to the Middle Eastern and Asian airlines. Of course the biggest issue is the cost of running their business is the highest among all the other airlines, but if the unions continue to hold a death grip, I am not sure how that will be reduced. The previous head tried cutting costs by positioning the airline with a very substandard product and that has failed and even tarnished their image. They need to consistently for the next 10-20 years investing in their product, to help build their reputation and show that there can be a premium European airline. From what I have seen, people are just dazzled by what Emirates, Qatar, and Etihad have to offer in the premium classes while most of those people know they would book in economy expecting amazing service. I haven't flown any of these airlines, but it just amazes me how people change their habits just to be associated with flying Emirates etc. I may not be explaining this very clearly, but AF needs to sell their experience as premium. They need to generate excitement for the airline. This is what I see is stated by De Juniac for the future, but AF always have difficulty executing such tasks.

KLM on the other hand has been doing very well after the merger, and once the business seats are replaced they would have quite a solid product. Granted its not 1-2-1, but it is still a very good seat. I wonder if the profit at KLM had anything to do with the synergies internally at the group allowing for lower costs? If they are separated, KL would need to find another suitable partner to team up with. Maybe Delta could invest in KLM?

As for Camiel Eurlings, I admit that I have no idea what he has done for KL in his position given his limited time, but I do have a feeling the strike might have had something to do with it. Many probably feel he should have been right next to De Juniac and Gagey as it doesn't show solidarity within the group by keeping quiet and letting the French division handle it. Of course I may be wrong and maybe his performance (or lack of) is what caused him to be replaced by someone more experienced and competent in the industry and within the airline.

kl838

[Edited 2014-10-15 17:19:02]
 
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usdcaguy
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 12:13 am

Is it possible that AF could be dissolved with KL taking over long-haul flying and Transavia the short-haul? This is far-fetched, but with the dissolution of AF staff and associated unions, life might be easier. Not in the cards, though, even if it might bring costs down.
 
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lesfalls
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 12:26 am

Finnaly KLM can be free from AF.AF has always basiclly power over KLM. Free KLM!!!  
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MillwallSean
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 1:28 am

We have this thread every year.
AF owns KL and I struggle to see why they would decide to get rid of it. Only reason would be that they are desperate and I see no signs that they are.
The numbers in the group is also questionable. Certain money generating assets is better placed in the Netherlands. This means that the dutch part of the operation will provide a higher return due to some group decisions.

In regards to KL I'm sure some within the organisation wish they weren't bought by AF. But its been ten years and the company isn't likely to change its structure. AF/KL is a group and ownership seems unlikely to favour a split. The French government owns 15.9% of the shares, add on that French banks and pension funds own another 20-25% so a decision to split the company has to be made within the french establishment. I struggle to see this happening right now.
Thus the idea that a large enough number of financial institutions with ownership is pushing for dissolution becomes difficult to believe. The companies that might want to push for this is US, UK and presumably Dutch based funds and shareholder activists, but when they go up against the french establishment they wont get anywhere unless the major French players agree.
I haven't heard any whispers from the French banks or establishment about dissolving the present company and listing or selling KL.
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allrite
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 1:33 am

Quoting MillwallSean (Reply 28):
The numbers in the group is also questionable. Certain money generating assets is better placed in the Netherlands. This means that the dutch part of the operation will provide a higher return due to some group decisions.

Going Dutch means splitting the bill. Maybe just confusion over a colloquialism lead to this rumour?  
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notaxonrotax
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 1:45 am

I am hoping hoping HOPING that this is true........

Bugger, if only KLM would have gone with BA!!

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eastern023
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 2:48 am

KLM to OneWorld!!!. Would that be cool!!!
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A388
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 2:59 am

Kl838,

Even though I agree with you on some points I don't know where you get the idea that everybody must be like Emirates, Qatar or Etihad and that people expect such premium service in economy class. By that logic the traveling public would be dumb to expect premium service for the price of economy. I have never heard of people changing their habits just to be associated with Emirates. Where did that come from? It's probably mainly aviation enthusiasts like us or business people who might do such a thing. Why invest in premium service during a time of crisis which so far has shown little progress. Airlines may change course based on how the economy changes unless you're an oil state that has the money to keep investing big during economy highs and lows. How can you sell premium when you know you don't have premium? By doing this you will lose customers because they will feel betrayed if you get less than what you expect or pay for.

I agree that KL might need to do something to improve their in flight product but going for a premium airline just as Emirates, Qatar or Etihad isn't the answer.

A388
 
Curiousflyer
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 3:18 am

When KL accepted to be bought by AF they knew exactly what they were going for. AF was already strike-prone and not always making the best strategic decisions, in a French environment where political and social concerns play a role and rein in free trade. Nothing which happened since can surprise them.

They did it because the network, and even the AF product as it was and is, offered great complementarity and the opportunity for synergies. They needed a critical size that they could not find alone.

As much as AF profits from KL's help, KL owes a lot to the strength of AF. Their brand and teams were remarkably preserved and this is a tribute to AF's ability to respect their different culture and strategy.

I fly them both and hope this success story will last. Given the way it has been set up legally, there is no reason why it would change... Except if AF gets itself in a much worse situation and a decisionis made to save the KL product.
 
SASMD82
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 4:45 am

Not going to happen.

Quoting dennys (Reply 8):

That could be The best décision for KLM ; No 320 , no 380
May be 747-8i , and no more bloody strikes !

As a lot of traffic of KL (partially thanks to AF) are transfer passengers, the A320 is easier to handle because the cargo can be offloaded easier because of the containers. The A380 is simply too big, nothing to do with the plane.
748 for KL is like believing in A346 for LX. Not going to happen too. They have the 77W, that's nearly the same capacity, way less operating costs.
 
1400mph
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 6:09 am

Bemuses me when people say 'not going to happen'

We all want to see a successful AF but if they are run into the ground due to various follies then KL won't have a choice. God only knows what the intricacies of it all would be though.

Certainly wouldn't be the end of the world for KL.

I think you all need to ask yourselves what kind of game plan DL has in mind. A big chunk of their revenue is derived from the North Atlantic. Its partners VS and AF-KL are not in good shape. Continental TATL is blighted by overcapacity and troubled economies. U.K TATL is strong but there DL and relatively tiny VS area totally outgunned by the BA and AA joint venture which is only going to get better and better.
 
SASMD82
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 6:11 am

Quoting eastern023 (Reply 31):
KLM to OneWorld!!!. Would that be cool!!!

They tried this 2 or 3 times before, thanks to the British legislations, this has failed and will never succeed. Beside, BA will KL (again) and not vice versa.

Quoting notaxonrotax (Reply 30):
Bugger, if only KLM would have gone with BA!!

Yeah....why?
 
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 6:28 am

Never understood why the Dutch owners agreed to that mesalliance. Without reading and knowing the exact figures quoted above, it was clear from the beginning that AF would drag KL down.

They should split as soon as this possibly can be arranged. KL has an excellent position to make it on it's own and by staying in the alliance, keep the relation to DL but economically stay Dutch without any external influence.
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TreeHillRavens
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 7:10 am

Quoting northwestEWR (Reply 9):
Those numbers are pretty shocking. Billions in profit from KL, millions lost by AF.

Before the creation of Air France-KLM Group, KLM was the one losing $$$ and Air France was the profitable airline.

Quoting Amsterdam (Reply 16):
The sad thing about this whole mess is that KLM and AF can actually be really strong together.

  
 
sxb
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 8:35 am

According to La Tribune, Camiel's departure has nothing to do with AF and is simply the result of internal (within KLM) divergences. Apparently Camiel was not involving himself enough and his management methods were more and more criticized. On top of that, KLM results have deteriorated (while remaining positive) and this highlighted management issues.

Source (in French): http://www.latribune.fr/entreprises-...ance-klm-klm-debarque-son-pdg.html

[Edited 2014-10-16 01:36:47]
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 8:38 am

     

OMG, if some AF head of department or marketing guy are reading this post, they might be freaking out. Let's say 95% of the people would vote for KLM leaving AF ?? I cannot imagine a worst image of a legacy company, aside from Air India.

KL should have joined BA...The KL brand had and has an excellent reputation, despite the merger with AF. On the other side, AF has not been able to link his name with the reputation of KL.
 
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 8:45 am

Quoting SQ773 (Reply 40):
KL should have joined BA...The KL brand had and has an excellent reputation

Exactly the reason why that merger failed, the brand name KL would have dissappeared. KL would have become something like "Dutch BA" and KL management was unwilling to pay that price.
 
PanHAM
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 9:13 am

Quoting 76er (Reply 41):
something like "Dutch BA" and KL management was unwilling to pay that price.

would have been interesting to watch how long it would have taken until the merged companies had started trading under the name "Air London".
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 9:28 am

Coming from a country wedged in between France and the Netherlands, and well aware of the differences in culture between the two countries, I've always thought this to be a very unlikely (and ultimately not too happy) marriage. On paper it must've looked great, but it takes more than that. I think they must've wondered many times in Schiphol already what they've gotten themselves into.

[Edited 2014-10-16 02:28:45]
 
LJ
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 9:40 am

Quoting MillwallSean (Reply 28):
The numbers in the group is also questionable. Certain money generating assets is better placed in the Netherlands. This means that the dutch part of the operation will provide a higher return due to some group decisions.

Indeed, we don't knwo how much of KLMs profits are due to accounting. Moreover, calling AF/KL AF biased is somewhat strange as AF/KL has left KL relatively untouched the past few years. Furthermore, it seems that AF/KL will continue with its plan to get more LCC flying in France despite the opposition from AF pilots.

Quoting bwest (Reply 43):
On paper it must've looked great, but it takes more than that. I think they must've wondered many times in Schiphol already what they've gotten themselves into.

Given KLMs past experience with AZ they knew exactly where they were grtting into. However, do note that after the failure of the KLAZ merger, there eas no stand alone option for KLM given its ambition. As the only viable alternative was not in KLs interest (as mentioned before in this thread, BA wanted to dissolve the KL brand), the merger with AF wasn't and still isn't bad for KLM (many seem to forget the advantages KL gets out of this merger).

Quoting 76er (Reply 41):
Exactly the reason why that merger failed, the brand name KL would have dissappeared. KL would have become something like "Dutch BA" and KL management was unwilling to pay that price.

Correct and wsan;t there also an issue with NW? I recall that there was also something between NW and BA which would mean the end of the NW/KL relationship.
 
kl911
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 9:44 am

Quoting LJ (Reply 44):
Correct and wsan;t there also an issue with NW? I recall that there was also something between NW and BA which would mean the end of the NW/KL relationship.

Well, there was an issue where the 'new' BA would be based in the UK and would not have openskies with USA as KLM had in Holland. The merger with BA would have meant an end to KLM TA flights out of AMS.
 
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RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 9:55 am

hello all

Quoting TreeHillRavens (Reply 38):

THANK YOU

I am an AF purser and I can testify to the fact WE at AF, were the ones wondering how long it would take for AF to ripe the benefits of the investment that the AF group was making into the huge loss making KLM at the time. Partly because we were also well aware of the challenges that AF would be facing soon after that, given its historic heritage of a state run overweighed old lady.

Since then, KL has indeed cleaned up the house much more quickly than we were able to do it at AF. Partly thanks to their anglo saxon culture, the efficiency of their social dispute resolution system, and of course, thanks to the strength and synergies created within the AFKL group as a whole. For those wishful thinkers, arguing that DL would be better off with KL than with AF, don't forget that DL had tied up with AF long before KL came into play. And yes, AF was one of the most profitable airlines of the world at the time.

AF needs to address its challenges and keep upping its game both in terms of profitability and customer service. In a 5 year time frame it will have done away with no less than 10 000 workers, and its costs have been going down dramatically over the last 2 years. We might not have made all the wise decisions yet, our marketing strategy is not always the best perceived in the world, particularly when the pilots unions follow a suicidal strategy led by internal politics, but you must realise that thanks to this strike, for the first time ever, de Juniac was given the opportunity to say that AF was run by its CEO and not by its pilots. This is the biggest cultural revolution we have witnessed in the last 20 years at AF.

Let them decide for the future of the airline, and let the pilots fly our planes. Sounds basic? Not in France, where everyone has an idea of how to better run the house, the company and the country. Pretty much like on a lot of forums on airliners.net...

Let us not forget that if AF alone were to report its taxes in the Netherlands, it would save 750 million Euros a year. So yes, KL is more profitable today, but AF is catching up, given its huge specific constraints. And this puts a lot of things back into their due perspective.

I will end this post by sharing some personal experiences with you.

I just returned from a trip in Luanda, Angola, which has to be one our most profitable routes: always full in the front of the 77W. No less than 4 clients in Business spontaneously came to me personally sharing their experiences with KLM, which they had to fly during the AF nonsense strike. All of them said (only one French among them) they preferred AF on all accounts. Not saying this is always the case. I can only remember how some people such as our dear contributor to this forum, abrelosojos likes to put it every time he can (I wonder why he actually still flies AF in the first place??!) "every AF cabin crew should learn a thing or two from their KL colleagues"...Just saying we are, as a group, on the right track. It also goes to show that AF and KL were very clever to respect both identities, cultures and complementarities, because they suit better different markets and cultures. We understand that, and we both benefit from that.

When we tied up with Delta, I had one non rev person working at the DL lounge in Atlanta come to me and say she was frustrated that her company had started a cooperation with this nonsense disorganised strike prone French airline. I don't think she still feels this way, as DL is one of the most profitable airlines out there, and a lot of it has to do with our Joint Venture. To me a Platinum SkyMiles on DL has exactly the same value as a Platinum Flying Blue.

Not sure we would be having this debate if AF had insisted on dissolving the KL brand and identity, which is exactly what everyone was concerned about at the time. I can only remember all the AF bashing (but we are used to that, and frankly it is a good thing that the French, despite what others have to say, have a good dose of self derision) going on here and on other forums, about the French colonialism, the fact that the Dutch culture as a whole was under threat and so on...everyone agreed that the sky blue birds were about to fold their wings, clipped by the mean blue white and red witch. 10 years later...we are still wondering who benefitted from whom... I think our colleagues at DL and NW, at US/AA and UA/CO only wish they had that luxury! Our motto has always been, since the very beginning: One group, 2 brands, 3 divisions (passenger, cargo and maintenance). And I don't see that changing in the near future.

As a flight attendant, I can tell you most of my colleagues wish we would talk and meet more with our colleagues at KL. Every time we have the opportunity to, we do. Because we love to compare and weigh our differences, and share our common points. Our management tells us they are more efficient? Their management tells them the same story the other way around. And so on. It is always very exciting to learn from each other and make things better for all our common customers. Back to the Luanda example...as we were about to close the doors, our station manager was telling me how the KLM crew arrives on wednesday morning in Luanda and only leaves on saturday...as we had just spent 10 hours on a brutal day use hotel room (arriving tuesday morning, leaving the same evening for a tough night flight back to CDG)...it left me wondering who was making more money on this specific route...

Let's celebrate KLM's 95th birthday!
 
kl838
Posts: 176
Joined: Fri Oct 29, 2010 6:22 am

RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 10:53 am

Quoting A388 (Reply 32):
Even though I agree with you on some points I don't know where you get the idea that everybody must be like Emirates, Qatar or Etihad and that people expect such premium service in economy class. By that logic the traveling public would be dumb to expect premium service for the price of economy. I have never heard of people changing their habits just to be associated with Emirates. Where did that come from? It's probably mainly aviation enthusiasts like us or business people who might do such a thing. Why invest in premium service during a time of crisis which so far has shown little progress. Airlines may change course based on how the economy changes unless you're an oil state that has the money to keep investing big during economy highs and lows. How can you sell premium when you know you don't have premium? By doing this you will lose customers because they will feel betrayed if you get less than what you expect or pay for.

You won't believe what the general flying public is like, I have come across quite a number of people who have developed this biased to Middle-Eastern airlines. As you and I know AF and Emirates are pretty much equal if we compare the latest products in Y. Yet, they believe that it is highly superior service than any other airline. These people fly EK, QR and EY exclusively, even though the Y product is effectively the same. These three airlines have the premium aura around it, and you might have not seen people change their spending habits to fly them, but I have and I was quite appalled. I choose not to fly QR because I don't support their employment practices, but that is my personal view.


As for AF investing in premium service, well honestly AF's NEV product was quite pathetic compared to the competition, I until this day don't understand why didn't they go straight from NEV 3 to the current BEST seat (Zodiac Cirrus). There was no need for NEV 4. AF has lost lots of premium traffic due to the subpar product and the overhauls to the FB program. AF is actually quite a premium heavy airline, and while I do understand the market dictates the decisions of the airline, a proper premium product is needed. The only consistent product in the AF fleet is the Premium Economy seat, which is decent (though not the best). If AF wants market share they need to compete in the premium sector, as thats where most of the profits are at. I am not saying that they need to be over the top or anything, but this current refurb of the fleet should have been done at least 5 years ago. KLM as well took 12 years between seats, and that is a very long time, especially considering that the previous seat was really bad. ( I am not including the NEV3 seat that is installed on KL 77W & A330 aircraft)
 
kl911
Topic Author
Posts: 3981
Joined: Mon Jul 21, 2003 1:10 am

RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 10:53 am

fa4af,

Thank you for that great post! Respect.
 
User avatar
EPA001
Posts: 3893
Joined: Tue Sep 12, 2006 8:13 pm

RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 10:53 am

Quoting fa4af (Reply 46):
hello all

Thanks for your very detailled insight into your view of the situation at AF and KLM. Very well written.

Quoting fa4af (Reply 46):
Let's celebrate KLM's 95th birthday!

Good idea!     
 
BSRadar
Posts: 50
Joined: Tue Jan 15, 2013 5:35 pm

RE: Rumour : KLM Could Leave Air France

Thu Oct 16, 2014 10:57 am

I've "lurked" this thread and I was waiting to see how long it would take for BA to appear in discussion (post #30 - perhaps a little later than expected).

However, first things first, and if as suggested earlier that the institutions, trusts and Dutch government et al that do control just over the 51% of the voting shares, then simply stated, KLM and Air France can be prised apart. That may appear as a glib statement, and, given the vested interests, it could/would(?) become very messy. No prizes for guessing which side would be throwing spanners into the works.

Prior to the amalgamation with AF, KLM had sought to tie up with others, BA among them. For all airlines, the imperatives to tie up with others are greater than the fierce desire to remain as an independent (three cheers for the little guy, but, however and alas......). KLM alone would feel those same imperatives again, and in this day, even more sharply.

I believe there are others on this forum who were party to some of the failed amalgamation discussions between BA and KLM, but as I recall there were 2 main stumbling blocks:

1) There was a gross disparity between the two airlines employees in pay, social security payments, entitlements, benefits etc. At the time the EC was trying to strongarm the UK into accepting its social security payment systems, i.e. putting more of the burden onto the employer, thereby forcing up the cost of employing people. The differences became irreconcilable, and therefore the main stumbling block towards amalgamation. (An ancillary point here: BA had a tricky situation as its own employee relations were starting to get strained, and essentially pulling in the opposite direction to which an amalgamation with KLM would require. The BA employee relations became much more hostile and vexatious for a long time until Willy Walsh eventually sorted them out).

2) At the time the KLM negotiators considered that the BA negotiators were approaching the matter more as a "takeover" rather than a merger of complementary interests.

Should (well, when as the majority seems to suggest here) KLM secedes from AF, I think it perfectly complementary for KLM to join the IAG, and which would allow them a measure of independence and automatic membership of one of the two strongest alliances. IAG have shown that the previous stumbling blocks and perceptions can be overcome. IAG comprising Iberia / KLM / BA would offer a mouth-watering world-wide route network, and stiffen up the Intra-European networks vis-à-vis the Star Alliance competition. A job well suited for the likes of Willy Walsh.

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