FlyingBlueKLM
Topic Author
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Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:04 pm

Is there any possibility of an AF-KLM breakup? As far as I know there mostly have been problems between the two, especially since KLM became a lot more profitable. If it would happen, what could happen next? This isn’t a serious question.
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EN: Full reverse is the best at touchdown!
 
Ciel
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:18 pm

I am an Air France (and ST) loyalist, so my opinion will be biased lol, but I don't think it will be in the interest of both parties to break up. CDG and AMS are major hubs in Europe, and I think they complement each other quite well.
 
Blerg
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:23 pm

Didn't this merger save KLM from imminent bankruptcy back in 2004 or so?
 
AeroVega
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:26 pm

FlyingBlueKLM wrote:
Is there any possibility of an AF-KLM breakup? As far as I know there mostly have been problems between the two, especially since KLM became a lot more profitable. If it would happen, what could happen next? This isn’t a serious question.


I guess you meant that it is a serious question. :smile:

Past experience shows that KLM cannot survive on its own. But perhaps Delta Airlines would be interested in buying a 49% stake?
 
onwFan
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:26 pm

Ciel wrote:
I am an Air France (and ST) loyalist, so my opinion will be biased lol, but I don't think it will be in the interest of both parties to break up. CDG and AMS are major hubs in Europe, and I think they complement each other quite well.

I agree it may not be wise to break up at this time, especially when consolidation is the best way to go forward. But ‘complementary’ is the last word I would use to describe their network. Their network is extremely redundant - they fly to the same cities mostly. The only difference is with West/East africa and Vietnam/Indonesia.
 
VSMUT
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:29 pm

KLM is too small to stand alone. If they somehow were to leave, it would mean getting gobbled up by IAG or Lufthansa. Neither would be a good thing.
 
Blerg
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:30 pm

If Lufthansa can efficiently and profitably operate both FRA and MUC then why can't AF-KL do the same for CDG and AMS? I suppose Paris and Amsterdam have much more O&D demand than Frankfurt and Munich do.
 
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PatrickZ80
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:35 pm

Blerg wrote:
Didn't this merger save KLM from imminent bankruptcy back in 2004 or so?


It did. Back then KLM wasn't profitable, but changes have been made since then. Due to those changes, KLM is now by far the most profitable airline of the two.

All KLM needed back then was a cash injection. Air France gave it that cash injection, which was used to turn KLM from loss-making to highly profitable. With all the money KLM has earned since then, they could easily repay that cash injection.
 
Arion640
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:40 pm

VSMUT wrote:
KLM is too small to stand alone. If they somehow were to leave, it would mean getting gobbled up by IAG or Lufthansa. Neither would be a good thing.


I would disagree. SAS does just fine as a stand alone entity and i’d say KLM has an even stronger network.

BA/KLM is said to be the merger that should of gone ahead.
1973-2020
 
Blerg
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:44 pm

PatrickZ80 wrote:
Blerg wrote:
Didn't this merger save KLM from imminent bankruptcy back in 2004 or so?


It did. Back then KLM wasn't profitable, but changes have been made since then. Due to those changes, KLM is now by far the most profitable airline of the two.

All KLM needed back then was a cash injection. Air France gave it that cash injection, which was used to turn KLM from loss-making to highly profitable. With all the money KLM has earned since then, they could easily repay that cash injection.


But it's not only about paying back the cash. KL would still need AF to stay competitive in many markets. It's not uncommon for KL to sell connections, especially long-haul ones, where one direction is through Paris. Even though KLM does have an impressive network, I still think they would need someone else in Europe to partner with, either Air France or British Airways.
 
MIflyer12
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:47 pm

That's a very durable Dutch dream. You're not going to wind back the clock and win the Franco-Dutch War, either.
 
goosebayguy
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:48 pm

I've just flown from MAN to DXB. Outward journey with KLM, return journey with AF. Have to say it all worked very well. I see no reason for a split. Maybe from past reading the AF side has too many benefits compared to KLM but that's a management issue really.
 
Waterbomber2
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 12:57 pm

I think that the current crisis might fuel some tensions between the two airlines.

France is heading into a lockdown while the Dutch are still not getting it and are making matters worse by trying to prevent economic damage.
I predict that AF is going to ground itself pretty soon and KLM will get greedy and try to keep running by moving all AF pax to AMS, perhaps even flying AMS-CDG with more frequencies or even widebodies. AF will let them and support them.

However, I predict that in so doing, KLM will actually burn through its own cash pretty fast and find itself begging AF to release cash to keep operating, but will be met by refusal and will be grounded. So like in most marriages, the fight will become about cash and divorce might ensue.
When things start getting back to normal, I can see AF holding on to its cash and whatever the French government will distribute to them, and would refuse giving KLM any cash until the Dutch government makes a significant contribution. However, the Dutch will reject any bailout of KLM and Air France could liquidate it or start running it under its own AOC.

Sounds a bit dramatic but this is my prediction of the scenario to come. It's a far-fetched guess with lots of moving pieces so take it with a pinch of salt.
 
airbuster
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 1:01 pm

Waterbomber2 wrote:
I think that the current crisis might fuel some tensions between the two airlines.

France is heading into a lockdown while the Dutch are still not getting it and are making matters worse by trying to prevent economic damage.
I predict that AF is going to ground itself pretty soon and KLM will get greedy and try to keep running by moving all AF pax to AMS, perhaps even flying AMS-CDG with more frequencies or even widebodies. AF will let them and support them.

However, I predict that in so doing, KLM will actually burn through its own cash pretty fast and find itself begging AF to release cash to keep operating, but will be met by refusal and will be grounded. So like in most marriages, the fight will become about cash and divorce might ensue.
When things start getting back to normal, I can see AF holding on to its cash and whatever the French government will distribute to them, and would refuse giving KLM any cash until the Dutch government makes a significant contribution. However, the Dutch will reject any bailout of KLM and Air France could liquidate it.

Sounds a bit dramatic but this is my prediction of the scenario to come. It's a far-fetched guess with lots of moving pieces so take it with a pinch of salt.


The dutch Finance minister already stated KLM is of vital importance to the Netherlands and can count on full support.......
FLY FOKKER JET LINE!
 
SA280
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 1:09 pm

Maybe bad together, certainly worse separated...

Why would they both want to lose economies of scale when it comes to costs, network attractiveness (customer choices) and having one more strong competitor in the European environment as separate entities?
 
KlimaBXsst
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 1:10 pm

airbuster wrote:
Waterbomber2 wrote:
I think that the current crisis might fuel some tensions between the two airlines.

France is heading into a lockdown while the Dutch are still not getting it and are making matters worse by trying to prevent economic damage.
I predict that AF is going to ground itself pretty soon and KLM will get greedy and try to keep running by moving all AF pax to AMS, perhaps even flying AMS-CDG with more frequencies or even widebodies. AF will let them and support them.

However, I predict that in so doing, KLM will actually burn through its own cash pretty fast and find itself begging AF to release cash to keep operating, but will be met by refusal and will be grounded. So like in most marriages, the fight will become about cash and divorce might ensue.
When things start getting back to normal, I can see AF holding on to its cash and whatever the French government will distribute to them, and would refuse giving KLM any cash until the Dutch government makes a significant contribution. However, the Dutch will reject any bailout of KLM and Air France could liquidate it.

Sounds a bit dramatic but this is my prediction of the scenario to come. It's a far-fetched guess with lots of moving pieces so take it with a pinch of salt.


The dutch Finance minister already stated KLM is of vital importance to the Netherlands and can count on full support.......


Yes but is KLM of vital importance to France? I think we have the answer to the question here.
Aesthetically the A 340 got it right!
 
Blerg
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 1:13 pm

KlimaBXsst wrote:
airbuster wrote:
Waterbomber2 wrote:
I think that the current crisis might fuel some tensions between the two airlines.

France is heading into a lockdown while the Dutch are still not getting it and are making matters worse by trying to prevent economic damage.
I predict that AF is going to ground itself pretty soon and KLM will get greedy and try to keep running by moving all AF pax to AMS, perhaps even flying AMS-CDG with more frequencies or even widebodies. AF will let them and support them.

However, I predict that in so doing, KLM will actually burn through its own cash pretty fast and find itself begging AF to release cash to keep operating, but will be met by refusal and will be grounded. So like in most marriages, the fight will become about cash and divorce might ensue.
When things start getting back to normal, I can see AF holding on to its cash and whatever the French government will distribute to them, and would refuse giving KLM any cash until the Dutch government makes a significant contribution. However, the Dutch will reject any bailout of KLM and Air France could liquidate it.

Sounds a bit dramatic but this is my prediction of the scenario to come. It's a far-fetched guess with lots of moving pieces so take it with a pinch of salt.


The dutch Finance minister already stated KLM is of vital importance to the Netherlands and can count on full support.......


Yes but is KLM of vital importance to France? I think we have the answer to the question here.


Well, Air France is of vital importance to France and without KL they might become less competitive which will only make more issues in France. So directly KL might not be but indirectly they surely are.

Also, from what I've seen France has already announced that they are ready to give a cash injection to AF.
 
kimimm19
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 1:19 pm

One can hope but ultimately, I think there is space for both airlines to coexist as with the others when overcapacity that we've been seeing is reduced after this hysteria blows over.
 
VSMUT
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 1:39 pm

Arion640 wrote:
VSMUT wrote:
KLM is too small to stand alone. If they somehow were to leave, it would mean getting gobbled up by IAG or Lufthansa. Neither would be a good thing.


I would disagree. SAS does just fine as a stand alone entity and i’d say KLM has an even stronger network.


You mean the SAS that has been on the verge of bankruptcy for the better part of the past two decades and to a great extent relies on Norwegian domestic PSO routes? They have been bailed out by the owner states more than once. SAS is more like Air France and Alitalia than KLM.


Arion640 wrote:
BA/KLM is said to be the merger that should of gone ahead.


Looking at what BA has become, it is safe to say definitely not.
 
KlimaBXsst
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 2:39 pm

Re-Nationalization of the airline industry in Europe is a topic I brought up earlier.

I say this is likely.
Aesthetically the A 340 got it right!
 
FMS747
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 3:36 pm

Let’s also not forget the fact that KLM has very little own market and mainly relies on international traffic...Air France helped KLM to get access to french market which is far greater in terms of demand than in the Netherlands. And again, talking about profitability between the two units, the french one is dealing with taxes which are much more expensive than in the Netherlands. You simply just can’t compare both tax environment and government support. I deeply believe that AF needs as much KLM as the opposite is true. It might also be the time for consolidation in Europe and an opportunity for AF-KLM to grow (TAP, LOT ?).
 
FlyingBlueKLM
Topic Author
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 3:51 pm

I don’t think it is likely that this will happen, if I’m correct KLM back then didn’t think that a merger with AF was amazing, but that it was the best choice out of the limited options they had. Willie Walsh said in 2019 that he is disappointed that KLM didn’t merge with BA (https://www.luchtvaartnieuws.nl/nieuws/categorie/2/airlines/british-airways-baas-baalt-nog-steeds-dat-fusie-met-klm-niet-doorging). If this would really happen, in my opinion it would be best for KLM to join another group if being independent isn’t an option.
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VSMUT
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 5:13 pm

FMS747 wrote:
Let’s also not forget the fact that KLM has very little own market and mainly relies on international traffic...Air France helped KLM to get access to french market which is far greater in terms of demand than in the Netherlands. And again, talking about profitability between the two units, the french one is dealing with taxes which are much more expensive than in the Netherlands. You simply just can’t compare both tax environment and government support. I deeply believe that AF needs as much KLM as the opposite is true. It might also be the time for consolidation in Europe and an opportunity for AF-KLM to grow (TAP, LOT ?).


There is a surprising amount of traffic from secondary French cities that gets routed through Amsterdam, on both KLM, Air France and HOP! flights.
 
FMS747
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 7:42 pm

VSMUT wrote:
There is a surprising amount of traffic from secondary French cities that gets routed through Amsterdam, on both KLM, Air France and HOP! flights.
Perfectly right. KLM must keep in mind that thanks to AF, french market became widely open to them.
 
Breathe
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 10:03 pm

VSMUT wrote:
Arion640 wrote:
VSMUT wrote:
KLM is too small to stand alone. If they somehow were to leave, it would mean getting gobbled up by IAG or Lufthansa. Neither would be a good thing.


I would disagree. SAS does just fine as a stand alone entity and i’d say KLM has an even stronger network.


You mean the SAS that has been on the verge of bankruptcy for the better part of the past two decades and to a great extent relies on Norwegian domestic PSO routes? They have been bailed out by the owner states more than once. SAS is more like Air France and Alitalia than KLM.


Arion640 wrote:
BA/KLM is said to be the merger that should of gone ahead.


Looking at what BA has become, it is safe to say definitely not.

Depends on who you speak to I guess. I'm sure the IAG shareholders are happy with the merger. BA front-line staff and customers not so much.
 
Arion640
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Re: Is there any possibility of an AF-KLM breakup?

Sun Mar 15, 2020 11:21 pm

VSMUT wrote:
Arion640 wrote:
VSMUT wrote:
KLM is too small to stand alone. If they somehow were to leave, it would mean getting gobbled up by IAG or Lufthansa. Neither would be a good thing.


I would disagree. SAS does just fine as a stand alone entity and i’d say KLM has an even stronger network.


You mean the SAS that has been on the verge of bankruptcy for the better part of the past two decades and to a great extent relies on Norwegian domestic PSO routes? They have been bailed out by the owner states more than once. SAS is more like Air France and Alitalia than KLM.


Arion640 wrote:
BA/KLM is said to be the merger that should of gone ahead.


Looking at what BA has become, it is safe to say definitely not.


You’re right about SAS, I didn’t realise how bad things actually were for them.

However, looking at what AF-KLM has become with one basically subsidising the other, i think they should of picked BA.
1973-2020
 
Blerg
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Re: Is there any possibility of an AF-KLM breakup?

Mon Mar 16, 2020 6:36 am

What would have happened to Transavia if they were to break apart? I can imagine AF unions would rush to advocate for its termination in France.
 
Flanker7
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Re: Is there any possibility of an AF-KLM breakup?

Mon Mar 16, 2020 7:34 am

Arion640 wrote:
VSMUT wrote:
Arion640 wrote:

I would disagree. SAS does just fine as a stand alone entity and i’d say KLM has an even stronger network.


You mean the SAS that has been on the verge of bankruptcy for the better part of the past two decades and to a great extent relies on Norwegian domestic PSO routes? They have been bailed out by the owner states more than once. SAS is more like Air France and Alitalia than KLM.


Arion640 wrote:
BA/KLM is said to be the merger that should of gone ahead.


Looking at what BA has become, it is safe to say definitely not.


You’re right about SAS, I didn’t realise how bad things actually were for them.

However, looking at what AF-KLM has become with one basically subsidising the other, i think they should of picked BA.


Absolutely not, had this merger taken place KLM would not exist today. Back in then BA wanted absolute control with a very marginal role for KLM so the then board of directors walked away from it. I'm not happy the way thing are in the current situation, but at least it gave KLM the chance to grow and be what it is today.
Flying blue only if possible
 
FlyingBlueKLM
Topic Author
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Re: Is there any possibility of an AF-KLM breakup?

Thu Mar 19, 2020 2:00 pm

Flanker7 wrote:
Arion640 wrote:
VSMUT wrote:

You mean the SAS that has been on the verge of bankruptcy for the better part of the past two decades and to a great extent relies on Norwegian domestic PSO routes? They have been bailed out by the owner states more than once. SAS is more like Air France and Alitalia than KLM.




Looking at what BA has become, it is safe to say definitely not.


You’re right about SAS, I didn’t realise how bad things actually were for them.

However, looking at what AF-KLM has become with one basically subsidising the other, i think they should of picked BA.


Absolutely not, had this merger taken place KLM would not exist today. Back in then BA wanted absolute control with a very marginal role for KLM so the then board of directors walked away from it. I'm not happy the way thing are in the current situation, but at least it gave KLM the chance to grow and be what it is today.

If I’m correct BA wanted to rename KLM to something (at least in my opinion ridiculous) like British Airways Netherlands. So I agree with @Flanker7 and @VSMUT. It was the right thing, at least back in 2004, to choose AF.
NL: Bij de landing is full reverse het leukst!

EN: Full reverse is the best at touchdown!
 
strfyr51
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Re: Is there any possibility of an AF-KLM breakup?

Thu Mar 19, 2020 7:45 pm

goosebayguy wrote:
I've just flown from MAN to DXB. Outward journey with KLM, return journey with AF. Have to say it all worked very well. I see no reason for a split. Maybe from past reading the AF side has too many benefits compared to KLM but that's a management issue really.

the AF benefits re because AF cannot take a Strike every other week like the French are prone to do. KLM is doing well and only the disgruntled among this board woud even consider messing up a well run business like they have. It would be like telling Delta to cut loose Northwest or USAir to leave American, or Continental to Leave United, It makes No sense! and they have no reason except to promote turmoil to have something else to comment about..
 
nicode
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Re: Is there any possibility of an AF-KLM breakup?

Fri Mar 20, 2020 9:27 am

Why a lot of people want KLM to divorce with AF ?
On A.net, this is a recurrent question for AF-KL... And not BA-IB, or LH-LX...

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