Dutch take stake in Air France KLM to counter French influence

 Dutch finance minister Wopke Hoekstra speaks during a press conference in he Hague.
Dutch finance minister Wopke Hoekstra speaks during a press conference in he Hague.PHOTO: EPA-EFE

THE HAGUE (REUTERS) - The Dutch government will take a stake in Air France KLM equal to that of the French government to increase its influence in the carrier's operations, Dutch Finance Minister Wopke Hoekstra said on Tuesday (Feb 26).

The move comes weeks after a confrontation between the Dutch government and the airline's French-dominated executive board over waning Dutch influence in the group.

Hoekstra said the state has taken a strategic stake of 12.7 per cent for €680 million (S$1 billion) and aims to increase that to about 14 per cent.

It is a "fundamental step toward protecting Dutch interests", Hoekstra told journalists in The Hague.

"Buying this stake ensures we have a seat at the table," he added.

Hoekstra said the state was not making an investment but protecting the interests of the Dutch economy and Amsterdam's Schiphol airport. Schiphol is Europe's third-largest airport and a major source of employment.

Officials at the French Economy Ministry were not immediately available to comment.

"Several times in recent years the Dutch interest was not given enough weight in important decisions for the company as a whole," Hoekstra said in a letter to parliament on Tuesday.

"In our view, possible consequences for Dutch public interests are not given enough consideration in the current set-up."

KLM personnel held a large protest rally in response to rumours that Air France intended to remove the Dutch chief executive of the KLM subsidiary, Pieter Elbers, and fully integrate the two companies.

Air France's new chief executive officer Ben Smith travelled to the Netherlands for a reportedly uncomfortable meeting with Hoekstra before an Air France board meeting on Feb 19.

Elbers' reappointment was confirmed ahead of the group's full-year earnings presentation on Feb 20, at which Smith also announced plans for further coordination of the airlines' fleets and networks.

Air France this month reported full-year operating earnings of €266 million, compared with €1.07 billion at the KLM subsidiary.

The group has trailed rivals Lufthansa and British Airways on profitability, held back by restrictive French union deals and strikes that last year wiped €335 million off earnings and forced out its CEO.