AMSTELVEEN--The management of Dutch airline KLM thinks the current coronavirus crisis could mean the end of the Air France-KLM combination. According to the Dutch branch of the combination, Air France needs to drastically cut cost, but it seems increasingly unlikely that the French airline will do so given the seven-billion-euro bailout the French government is providing, people involved told Financieele Dagblad newspaper.
The relationship between the French and Dutch at Air France-KLM has been deteriorating for years, culminating in the fight to reappoint Pieter Elbers as KLM’s chief executive officer at the start of last year.
KLM is annoyed that Air France is taking charge, while the airline itself is struggling much more than KLM, which wants Air France to put its finances in order by cutting cost.
The financials of both airlines were brought into focus by the coronavirus crisis, which grounded almost their entire fleets while expenses still need to be paid.
At the Dutch airline, the conviction is growing that a split might be better, and for Air France and KLM to limit their relationship to coordination, according to the newspaper.
The French and Dutch governments announced on Friday that they will provide financial aid for their national airlines. These bailout packages showed that KLM thinks it would be able to manage with a government-guaranteed loan of between two billion and four billion euros, provided that air traffic is back to 80 per cent of normal by the end of next year.
While Air France will receive a loan package of seven billion euros from the French State, there is still considerable doubt about whether that will be enough.
Dutch Minister of Finance Wopke Hoekstra and his French counterpart Bruno Le Maire both stressed that public money will only benefit their own airline. This could theoretically result in two nationalised airlines, something KLM is taking into account, the paper wrote.
KLM doubts whether the two governments will be able to act jointly in a recapitalisation, pointing out that the governments could not even coordinate Friday’s press conferences. The Dutch press conference was held despite the negotiations with KLM on the aid package not being finalised yet, because France announced its support for Air France.
