The commercial aviation crisis caused by the coronavirus pandemic could lead the Air France-KLM group to a disruption. The information was revealed by the Dutch newspaper ‘Financieele Dagblad’ which quoted top KLM executives.
Gathered under the same command since 2004, the two national airlines are expected to receive loans from their respective governments to remedy mounting debts caused by the shutdown of almost all of their flights in recent months.
And it is precisely these financings that would have become the point of contention between the two companies. While the French government expects an injection of 7 billion euros into Air France, the Dutch government estimates to provide between 2 and 4 billion euros for KLM.
It turns out that KLM has enjoyed better financial health than the French company, constantly under pressure due to its high operating costs and strikes initiated by employees.
Even before the pandemic, the Dutch partner was already uncomfortable with Air France’s financial situation and the imminence of receiving the loan has made KLM doubt whether its partner did its part to deserve this credit.
According to the agreement of the French and Dutch governments, the loans will be made specifically for each company, something that reinforces the impression that both will come out of the crisis differently.
In this 16 years of partnership, Air France stopped being profitable to accumulate debts while KLM today has a more comfortable financial situation and a leaner structure.
Hubs in Europe
Created in 2004, the holding company that controls the two airlines still maintains the French and Dutch governments as minor partners today, with a 28.3% share. Delta Air Lines and China Eastern Airlines own 8.8% each while employees have 3.9% – half of the shares are dispersed in the financial market.
In addition to financial issues, KLM and Air France also face a dilemma regarding their hubs. Amsterdam’s Schipol Airport is one of the most important gateway in Europe and has features that make it more efficient in distributing passengers as more integrated terminals and operation on up to three simultaneous runways.
Air France, in turn, operates its hub in Charles de Gaulle, which is larger and is not restricted to connections only, since Paris is one of the cities that receives the most tourists in the world.
Different fleet strategies
The clashes between the two airlines also extend to the aircraft fleet. While Air France went through a long period without new orders, the company recently closed an agreement with Airbus to receive the A220 at the same time that the A350 debuted on its routes, a jet that will be operated exclusively by it after taking over orders from KLM .
The Dutch airline has favored Boeing jets, of which it operates the 737, 777 and 787, in addition to some A330s. KLM had also kept the 747 in service, but decided to retire it in recent weeks. Regarding small jets, the company chose to order Embraer’s E195-E2, which rivals the A220.
With the future so unpredictable, anything can happen with the two longtime partners.