The coronavirus might end the collaboration of Air France-KLM
It is not unlikely that the coronavirus will end the collaboration between Air-France and KLM. The board of KLM admitted the previous fact in an interview. Both airlines are in heavy weather and are asking for monetary state-support. There have been a lot of irritations and differences between the two of them. Taking the obligatory costs and the amount of support from the state as an example. This creates a lot of uncertainty about the sustainability of this partnership.
The chronological development of the collaboration
2004 was the year that Air France and KLM started working together in the name of the Air France-KLM Group. Back then the partnership was very profitable for KLM. The French Airline was doing much better financially. However this changed during the years. Whereas Air France barely made any adjustments in her company policy and strategy, KLM modernized and improved. At this point in time KLM has a much stronger financial position than Air France. The profits of KLM are three times the profits of Air France.
Furthermore, the spending pattern and expense of Air France relatively high compared to KLM. Most of the financial problems within the Air France-KLM Group are caused by Air France. As icing on the cake, there was quite a bit of disagreement between Air France and KLM about the appointment of Air France-KLM CEO Elbers. This did not benefit the mutual atmosphere and caused quite a bit of irritation for both airlines.
The French government is no not really happy about the fact that de Dutch governments still holds a significant number of France-KLM shares, while the French government has gradually reduced this considerably.
State support from France and The Netherlands due to the corona crisis
It is clear that Air France-KLM’s cooperation has not been entirely flawless in recent years. However, the corona crisis has created a new problem. The majority of the fleet is currently forced to run aground. No profit is made and the airlines do incur costs. This could include maintenance costs or costs for the storage or parking space of the fleet. So financially, airlines are struggling. This sharpens the state of the relationship.
Differences in state support
Because of the financial blow – which covers most of the aviation industry – KLM and Air France asked their governments for support. The Netherlands and France stated that they will only support the airlines of their country. The Netherlands is willing to make between 2 and 4 billion euros available to KLM and France has indicated that it will make 7 billion euros available for Air France.
KLM thinks the 2 billion euros will help them through the crisis, but has less confidence in Air France. The fear is that 7 billion euros will not be sufficient for Air France and that they are not prepared to cut costs. Especially not when Air France will receive the generous state support from the French government.
Future perspective of the Air France-KLM cooperation
Due to all these dilemmas, it is a real possibility that the intensive cooperation between Air France and KLM through the Air France-KLM Group will not last. Perhaps in the future Air France-KLM may continue as two separate national airlines and that there will only be any cooperation on a coordination and coordinating level.
Joe Kuijpers
As chief operating officer I am responsible for the operational affairs within Claim24. My daily activities consist of monitoring or improving our services and managing our team of enthusiastic employees in the Netherlands and +10 international countries.
