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            may 25, 2019

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Dutch government seeks bigger stake in Air France-KLM


THE Dutch government's out-of-the-blue decision to acquire a stake in Air France-KLM has raised concerns that competing national interests will upset chief executive officer Ben Smith's efforts to fat-trim the airline.
The Netherlands purchased a 13 per cent holding, a move aimed at gaining parity with influential shareholder France following a power clash that left the Dutch side of the partnership weakened. The present company was created two years later when the French flag carrier merged with its smaller Dutch counterpart.
"The Dutch stake does not make us more positive," Bernstein analysts including Daniel Roeska said in note, reported Bloomberg. "We worry that national diverging interests will slow the group down in its much-needed restructuring."
According to Dutch Finance Minister Wopke Hoekstra, the government was concerned that decisions on KLM's strategy more frequently were being made at the level of Air France-KLM's Paris-based holding company.
"There was simply too little influence from the state in KLM to be able to look after the Dutch public interest well and to make a success of KLM," Mr Hoekstra was quoted as saying. "This step shows our long-term commitment to the entire company."
The move flares up tensions between the French and Dutch arms of Air France-KLM, just as pressure was easing from a crisis that threatened the position of KLM boss Pieter Elbers.
The Dutch head stayed, with Mr Smith gaining a seat on KLM's supervisory board and winning a more streamlined power structure that sidelined some of the cumbersome committees that slowed decision-making but ensured the Dutch side had some parity.
Mr Hoekstra said the Dutch government, which held a 5.9 per cent in the local KLM unit before the recent transactions, wants to reach parity with France, which holds a 14 per cent stake in the holding company and as a long-term investor has extra voting rights that give it 23 per cent of the vote.
Air France-KLM's board and the French government weren't informed of the Dutch purchase in advance, French Finance Minister Bruno Le Maire told Les Echos. He said he reaffirmed his support for Air France-KLM management and said it is "essential to respect the principles of good government" without national interference.
Mr Smith, who took over in September after Mr Elbers refused the job, has made clear he wants the units to operate more like a single company, a move that has been met with resistance from KLM managers and unions who say they fear Air France's lower profits will drag down their company.

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