Dutch State to match France’s stake in Air France-KLM

In a move that came as a surprise to Air France-KLM’s Board and the French government, the Dutch State acquired a 12.68% stake in Air France-KLM Group, valued at US $774 million. In the near future, the Dutch Finance Ministry plans to match the French Government’s 14.3% stake in the holding company through the purchase of additional shares, according to Bloomberg.

A statement issued by the Dutch Ministry of Finance cited the need for “direct involvement” to counter KLM’s perceived loss of influence on key decision’s, which are increasingly made at the holding company. The investment follows rumblings earlier this month that the French-headquartered holding company was looking to further reduce the autonomy of the two main airlines in the group and streamline decision-making processes, such as aircraft purchases. To do so, Air France-KLM considered ousting KLM’s current CEO, Pieter Elbers – a suggestion that didn’t resonate with the Dutch. After a bit of back-and-forth, Elbers was ultimately reappointed for another term on 19 February, and the Dutch Government initiated the process of acquiring shares in AF-KLM the next day.

Though it’s not immediately clear how the Franco-Dutch company’s new investors will impact cargo operations, by a number of measures, the heydays of KLM/Martinair Cargo preceded the marriage between Air France and KLM, which was completed in 2004, and it is difficult to imagine a negative impact. In its statement, the Dutch Government also recognized, “Thousands of jobs are directly and indirectly involved with the airport and the intercontinental network of KLM,” and many of those jobs are related to air cargo logistics.

Since the merger was completed fifteen years ago, the Group’s cargo unit has decreased in size and influence. The chart below illustrates how the three carriers that were operating a mighty freighter fleet of 26 widebody freighters shortly after the merger, in April 2015, now operate a hollowed-out freighter fleet comprised of just six units.

Of course, the Franco-Dutch merger wasn’t solely responsible for reductions to the Group’s freighter fleet. The fleet operating today is the product of a number of influences, including, the Great Recession, and a deliberate shift towards reliance on bellyhold capacity, as Air France and KLM have added cargo-friendly widebody aircraft to their passenger fleets.

For now, the combined cargo operation continues to focus on yield, rather than volume, and there has been no mention of augmenting the freighter fleet. KLM Cargo, for its part, has remained as one of the industry’s most innovative carriers. Might a bit of Dutch influence bring freighters back into the equation?

Those interested in learning more about demand for widebody freighters s are invited to join us at Cargo Facts Asia 2019, to be held 15-17 April at the Langham Shanghai. For more information, or to register, visit www.cargofactsasia.com. Discounted early-bird registration ends 1 March.


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