February 15, 2019 / 10:09 AM / 10 months ago

Air France CEO meets Dutch politicians on KLM unrest

THE HAGUE (Reuters) - Air France-KLM chief executive Ben Smith on Friday met the Dutch finance and transport ministers, amid growing unrest at the company’s vital KLM subsidiary over plans for tighter integration with its French parent.

FILE PHOTO: Pieter Elbers, President and Chief Executive Officer of KLM, poses before a news conference in Paris, France, July 24, 2015. Air France-KLM on Friday reported lower second-quarter operating profit and slipped further into the red with a net quarterly loss of 79 million euros. REUTERS/Charles Platiau/File Photo

Smith did not answer questions after the morning meeting in The Hague, but Netherlands Finance Minister Wopke Hoekstra told reporters that they had had “intensive talks”.

“I don’t think it’s polite to say exactly what we discussed,” Hoekstra said. “It was about protecting the interests of Schiphol (airport) and KLM.”

Dutch Prime Minister Mark Rutte also declined to give details of the talks, but said there were “serious question marks” over the performance of the French-Dutch airline as a group.

“There’s no immediate threat, but there is cause for concern if you compare their performance with other airlines”, Rutte said.

For the first nine months of 2018, Air France Group reported operating profit of 328 million euros ($370 million), while KLM had operating profit of 960 million euros.

The relative outperformance of the Dutch subsidiary has caused tensions within the group. KLM staff regarded repeated costly strikes at Air France with dismay, as the Dutch arm of the union weathered painful cost-cutting and layoffs.

The meeting comes a day after KLM received a petition signed by 25,000 of its 35,000 employees asking Air France to renew the contract of KLM CEO Pieter Elbers, whose term expires in April.

Air France’s board is due to meet Feb. 19 ahead of full year earnings on Feb. 20, a meeting where either a decision should be made to reappoint Elbers or a new leader should be nominated.

Elbers is seen as a staunch defender of Dutch interests, as KLM has carefully guarded its independence within the Air France group since its takeover in 2003.

“It’s incredibly important for the Dutch economy and the position of Schiphol as a major hub that KLM does well”, Rutte said. “We need to manage these issues well, and my government is working intensively to do so.”

Reporting by Toby Sterling, Bart Meijer and Stephanie van den Berg; Editing by Edmund Blair and Kirsten Donovan

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