World News – UA – Air France-KLM in critical talks for the future as a joint venture

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Paris / London – Air France-KLM’s future as a combined company will be put to the test as France and the Netherlands prepare for critical talks on bolstering the weakened finances of the airline, according to the French Minister of Transport

The discussions will raise fundamental questions about how the airline is structured and supported by the two countries, Jean-Baptiste Djebbari said in an interview Governments pledged € 10 billion earlier this year to support the carrier’s shattered finances by the pandemic, but more will have to be done to ensure its survival

« Do we really want an integrated business or not? » Djebbari said in his office in Paris « Within a contract or an integrated group, the benefits must be shared and fair »

The global health crisis has further accentuated the already precarious relations between the two main shareholders of Air France-KLM The fall in air transport and the resulting losses for the carrier are pushing France and the Netherlands to seek a way to collaborate on a possible injection of equity, barely 18 months after a bitter and unprecedented dispute

In February 2019, the Dutch government revealed that it had secretly amassed a stake to match France’s stake at 14%, blinding Paris and revealing its intention to exert more influence over Air France-KLM, a rival of the owner of British Airways IAG and Deutsche Lufthansa

Latest dilemma follows a resurgence of the coronavirus pandemic that has plunged airlines into further turmoil after short resumption of travel during the summer months Air France-KLM CEO Ben Smith, said discussions are underway with shareholders for a recapitalization as the state bailout is only enough for less than a year The company is expected to release its results on Friday, but has already warned of « significantly negative » profits in the second half after a record quarterly loss in July

« What is now on the agenda is how the group can recover, » said Djebbari, licensed business jet pilot and former executive of Luxembourg operator Jetfly « What will be the role of states and, within the framework of its new strategy, what will be the needs of capital, what type of nationalization – if this is what is necessary – and under what conditions »

The scope of the issues in dispute for Air France-KLM underscores the global nature of the crisis for both governments and carriers Lufthansa, which owns former national carriers in Austria, Switzerland and Belgium, has avoided the insolvency thanks to a multi-government bailout of 9 billion euros

French state support for the carrier will not wane, even if the resumption of air transport is only gradual, said Djebbari, citing its « extraordinary » strategic and geopolitical importance French Finance Minister Bruno Le Mayor, supported the troubled carrier by asserting that the state would guarantee the survival of Air France, while its Dutch counterpart was more circumspect

Asked in September whether the airline would emerge from the crisis, Dutch Finance Minister Wopke Hoekstra said: « It is not obvious » The Netherlands took more time to allocate loans and guarantees to KLM than the French to Air France, leaving open the question of how much money the two states are willing to invest in the airline and whether the Dutch will be on board

The challenges of reaching a political deal are magnified by years of bad blood between the two units, which came together in a 2004 merger. KLM has long criticized French control, the lower margins of ‘Air France and the history of labor disputes

In the interview, Djebbari said that KLM had benefited more than the French branch over the past decade from being part of the group due to the support it received from the Netherlands at its Schiphol hub in Amsterdam

« Air France-KLM is not quite a group; few of its operations are shared and the Dutch have a lot of power, « he said » The question is: what should we do and what do we want to do together?  »

As French Minister of Transport, Djebbari was particularly interested in the aviation sector because of his experience After studying aeronautical engineering in Toulouse, home of Airbus, Djebbari spent time with the air regulator French civil aviation and as an expert for the courts

Four years ago, as he was pushing forward his project to create a regional airline, he met then Economy Minister Emmanuel Macron and threw his hat in the ring, winning a seat in parliament in 2017

There he led an effort to recast SNCF’s loss-making and heavily indebted state railway – a bastion of labor disputes that has proven to be a deep trap for a range of political leaders. p>

The pandemic could have a lasting effect on public transport systems, including trains and subways, as people could end up working more from home, Djebbari said

Likewise, with cuts to Air France’s domestic services in deficit and low-cost competitors leaving regional airports, certain regions of France could find themselves without vital connections for their economy

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Posted by Arena Holdings and distributed with Financial Mail on the last Thursday of every month except December and January

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SOURCE: https://www.w24news.com/news/world-news-ua-air-france-klm-in-critical-talks-for-the-future-as-a-joint-venture/?remotepost=482606

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