Future of KLM and / ?? Air France!

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This topic contains 57 replies, has 18 voices, and was last updated by  IanFromHKG 7 Sep 2018
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Viewing 15 posts - 1 through 15 (of 58 total)

  • MarcusGB
    Participant

    I opened a new topic as this is not now about just strikes at Air France.
    It seems that AF staff are in a self destruct, systemically selfish mode, that may well lead to The Company not surviving. This was enphasised today by the French Finance Minister. Shares fell 14% today, less than half the value in December.

    Is it time that KLM divides itself off completely from Failing Air France?

    As pointed out on the other Topic, KLM are making profits, brand strong, and have as a Company Team, endeavoured to adjust and do their best. The attitude is so different within KLM, and within AF, and you see it at their hubs, and on board. There appears to be a distinct attitude and behaviour of each Airline that simply does not meet in any way.

    I have flown KLM for 25 years. They have been an excellent Airline, and their Brand image i find everyone sees as reliable, hard working, constantly striving to be better, Team Oriented, (a Family as staff regard it), and one of Europe’s best Airlines. It has great respect Worldwide in many countries they serve.
    They retain many destinations within Europe (more their feeder network), to their Long haul network spanning most of The World, but Oceania. Refraining from going more low cost with BOB, and Cityhopper expanding through smaller airports in Europe, and an almost completely renewed fleet, with more dreamliners in the pipeline.
    KLM are set for the future.

    I know several senior staff in KLM, one Operational Director at Schiphol, Patience and tolerance (which the Dutch have more than most European countries), has run out.
    The Brand and the Staff Teams of KLM does not deserve to disappear, or be further damaged by the atrocious behaviour of Air France, which has been on going for now some years. This has reached a simply incompatible point as Tom and Alex, and others, have been indicating on the AF Strike thread.

    Is it financially possible for KLM to “Break Free” financially as its own Company?
    Financial reports are often mixing the two, and hiding the sheer waste and destruction AF are making to the KLM Brand, let alone their “Do not care” about their own, or their jobs! HOP, JOON is Not working.
    I do not know why they are even contemplating taking on Alitalia, when they cannot even run a content team of staff, and are damaging what they have so badly at Air France!

    Surely The Dutch Government must have now some strategy should this continue, to separate KLM and allow it to thrive and stand on its own reputation, hard work, and excellent brand?
    I cannot see The Dutch wanting to lose KLM, nor their excellent Schiphol Hub, always voted the best in Europe, looking 20 years ahead with expansion.

    And what of having Air France / KLM shares if this is enabled?
    How secure is the Flying Blue program, and your “Bank of Miles”? These can be worth a lot of money in value for redeemed tickets Worldwide in Business Class.
    All of us at BT regard our Collections of miles as very valuable!

    It would be interesting to see BT’s team view and that of those who know or fly often, or have loyalty with the Flying Blue program.

    I would like to see both Airlines divided and separate. Let each fall or thrive on its own results, and reputation, and AF hide behind the success of KLM.
    If The French want their national Airline to fail so be it. The AF staff behaviour is shameful, at times Criminal (attacking their executives), ultimately selfish, and will lead to the Airline failing. Who would even bother to book AF flights at this moment?

    The Dutch do not wish the same, nor do KLM and the work of the KLM family within it.
    Neither do i as a person Proud to fly KLM, and give them my loyalty and business.


    Edski777
    Participant

    It is about time the French appoint a professional rather than a political chairman. Someone capable of dealing with the unions and restructuring Air France. Results over 2017 prove that Airfrance/KLM is heading for the cliff and going along with the unions’ demands would mean taking “a big leap forwards”. Normally not the best strategy while at a cliff’s edge.
    The cost of Air France’s personnel cost is around 30% of their revenue, with BA and LH around an estimated 23% and low cost carriers like EasyJet and RyanAir around 15%. If, as the unions demand, Air France would increase salaries with 5% the gap with their competitors rises to a level that is totally uncompetitive.
    KLM has a result of 8.8%, where Air France didn’t get any further than 3.7%. Both in a bullish market. We all know that that won’t last forever. Strong economic headwind is always just around the corner. Fuel prices are rocketing, competition if fierce with low cost carriers like Norwegian and Ryanair or the ME3 cutting into some of the most profitable routes.

    Politicians are getting involved now. The transport ministers of France and the Netherlands had a conversation about the situation yesterday evening and they have reiterated that this is an Airfrance/KLM problem and for them to resolve. The French prime minister has alredy expressed that when the airline group gets into financial difficulties the French government will not bail them out.

    Dutch members of parliament are now openly discussing the option of withdrawing KLM and Transavia from the Airfrance/KLM group. Something done in the same way as the Dutch government did with ABN/AMRO, the Dutch banking group. KLM and Schiphol airport are too big a financial and economical interest to the Dutch to let them be ruined by totally clueless French management and unions.

    Another option discussed in the Dutch media is to appoint Pieter Elbers, chairman of KLM, as chairman of Air France/KLM group. He is the chairman of the only successful part of the Airfrance/KLM group, has turned KLM around and has excellent relations with the Dutch unions and the Dutch personnel. Although it has to be said that Dutch management and unions show to have much more economical sense and willingness to compromise in the interest of the organization than the French. Let’s call it common sense and realism.

    Bloomberg wrote that the unions should take a good look in the mirror. Well, I believe that the time for that has past. It is time for action to save this airline group or risk it falling apart and disappear. The profitable parts to be sold off and the rest to go bankrupt or continue as a third rate small airline.
    Chances are that the French unions will demand that in order to prop up the figures of Air France activities and routes will be transferred from KLM to Air France. But that would result is frustrated fights between the two major parts in the group. And there is absolutely no guarantee that this move would work in the long run.

    From an investor and passenger point of view it would be wise to abandon the fixed distribution of aircraft/seats and expand the KLM brand. This would also send a strong signal to the unions that they have to cooperate with the management in the interest of the total group in today’s economic environment.

    As someone based in the Netherlands and a regular passenger on KLM flight I would hate to see the demise of a great airline that KLM is with highly skilled and motivated personnel that provide an excellent service. I do sympathize with the KLM personnel that is increasingly worried about their future and frustrated about the actions in France.


    AMcWhirter
    Participant

    Thanks for starting this thread MarcusGB.

    I wonder how many readers can remember the time when KLM *almost* linked with Alitalia ?

    Both carriers linked their schedules via their AMS and FCO hubs.

    Both printed joint marketing, branding and even timetables headed KLM/Alitalia. I still retain a copy of one.

    But at the last minute the linkage was called off.


    MarcusGB
    Participant

    Thanks Edski, for that insight, especially from within NL’s, to hear and get an idea of what is being discussed, and the Dutch Perspective.
    I wonder what the feel is from within France similarly?

    I completely agree with your very to the point analysis, and we are clearly talking of Dutch and french Culture within each Airline being so different.
    Both my Dutch and French friends have said it reflects each country as a whole, but i have felt the difference the second you go into a Terminal or step on either’s aircraft. I simply enjoy the whole KLM experience and reliability and running of services, and i dread AF and always have awful, poor experiences.

    When hard times came to KLM, we must recall that ALL staff came in to work in any way they could voluntarily, or move roles, Flight Operations, ground services, Engineering, HR, Accounting, Admin, to keep “The family” going. Pilots, Cabin crew, Engineers, Ground Staff.
    I have great respect for that, much my own style of Management, effective Teamwork, Work Community.
    Air France has none of that, “Not my job or concern, i don’t care” one Purser said from AF to a Dutch colleague!

    It is a very complicated issue, Individuals, and investor Companies, Governments holding shares, Dutch Government / City of Amsterdam holding stakes in Schiphol. The success of each interlinked. If “The Group” own KLM, I agree the best they can do is to part them in all ways possible, hold them to account for their profits efforts and Brand. They have already cut many domestic AF services, Hop, and Joon created (both neither work), so they should simply close down all that does not balance the books.
    Let each fail if they do not make the grade, and not drag the other side down. Similar to the success of Dutch Transavia, that also run high capacity and at a profit, as do CityHopper.
    Blurring the two as they do, is no longer acceptable, and steps need to be taken when there is active open discussion about Air France “Ceasing to exist”, when KLM certainly will not fall, IF it can stand alone.

    Alex, thanks, and a nice reminder to hold!
    I recall booking a very cheap flight return to Sydney with Alitalia, but they did not actually fly there. They did not meet Australian safety standards!
    I tried to upgrade my seat via KLM, but they said it was Alitalia, and no one seemed to realise it was a 3 x weekly KLM 747 that flew MXP-SIN-SYD. Everyone in both Airlines told me i was wrong, but vindicated i was when i arrived Late, ex London on Alitalia, so see a bit Blue KLM 747!
    After Alitalia walked off with my passport stating “there is no Visa in it” (it was electronic, despite having lived there), i almost missed the flight, rushing on board after they closed the flight!

    The KLM crew were fantastic, i was so stressed, and clearly had been completely misinformed for weeks and that day, (a Flying Dutchman Gold member then). they took me upstairs to World Business Class as a compensation, in Singapore crew changed, the strict Australian KLM Purser came up to allow me also to stay “shocked at the way you were treated, so I will allow you to stay here”!
    My return, Alitalia had in their systems changed my date 7 times we found out, grossly overbooked. I simply could not get on the flight that day. KLM staff said “We will look after you” if i flew the next day, on the KLM flight into Amsterdam.
    I flew back Business Class also, got a £500 voucher, and all expenses paid for the extra eve. No thanks to Alitalia!
    The great days when KLM flew down to Sydney, and even then “A-Lie-Talia” as i called them after, were no different to now in organisation. Even Etihad could not change them.

    Perhaps Alitalia and Air France should merge and go downhill together as the worst, staff and attitudes are very matched, and leave KLM to do what they do best.


    AMcWhirter
    Participant

    Perhaps Alitalia and Air France should merge and go downhill together as the worst, staff and attitudes are very matched, and leave KLM to do what they do best.

    As recently as last January the FT was reporting that Air France/KLM were interested in acquiring Alitalia.

    It seemed strange because previously Air France’s CEO was quoted as saying “I don’t think the past experiences of either KLM or Air France in their relations with Alitalia encourages us to repeat the experience of a direct presence in Italy.”

    Yes Alitalia and KLM in Australia is a reminder for me.

    I suspect Alitalia was there because of the large Italian community in that country. Olympic and Yugoslavia’s JAT were others that served Australia at that time.


    AMcWhirter
    Participant

    ghlotus
    Participant

    As the old the joke goes:

    ALITALIA:

    A lways
    L ate
    I n
    T ake-off
    A lways
    L ate
    I in
    A rrival


    rferguson
    Participant

    The irony is that in France paid up TU membership is lower than in the UK yet the statutory powers they hold are immense.

    This article is not a new one (and i’m not sure if Macron has changed any laws so far that it pertains to) but it explains a lot of why the AF CEO had no choice but to stand down.

    https://www.economist.com/blogs/economist-explains/2014/03/economist-explains-15


    MarcusGB
    Participant

    I read the Group’s Board will meet 15th May to decide the Management Structure for immediate times.

    An Opportunity to start dividing the two Airlines, reporting their finances apart, gearing up for the release of KLM.
    Both Airlines realise this is on the cards, and certainly from KLM, a highly cautious and defensive approach, anticipating reality, and a chance to protect the KLM Brand going forwards. Many other carriers will take AF’s place at CDG, but the same would not be welcome nor successful if KLM were to cease @ Schiphol. Strong KLM advocates, and Dutch Government strategy for keeping a National Dutch Airline need to be represented in the new Management structure.
    KLM is after all, The World’s longest running Airline Company.

    Thanks Alex.
    (Unless you subscribe to the FT we cannot see the link)
    Always very interesting to hear your insightful and broad views. Looking at how the Airline Industry has changed in the last 20+ years, who could have predicted such fundamental changes to the way we fly

    rferguson – Thanks also, an interesting perspective, and of course this AF /KLM Crisis which it has become, is Part the casualty of French Politics.


    transtraxman
    Participant

    Does one really think that Air France will be allowed to go bankrupt? That is one possibility that neither the French unions nor the government will permit. The European Union has proved incapable of controlling the French and Italian governments. They do precisely what they want “in their national interest”.
    Thus the French might have to accept KLM seperating from Air France but would that mean Air France going bankrupt? I doubt it. There could well be two companies going seperate ways.
    What the European Union decides about Alitalia might well be more significant. If the EU said that Italian government aid was enough after over €900million then Air France might have to follow suit. However, France holds a stronger position so might well obtain the benefits of maintaining Air France flying without having to go into bankrupcy. Who knows?


    capetonianm
    Participant

    I have been flying KLM for many years and have rarely received anything other than excellent service, the exceptions being when I had to contact their lost luggage department which was staffed entirely by French people.

    I love the work ethic and the attitude of the Dutch as much as I loathe that of the French. It would be hard to find two nations less compatible. I was doing some work for KLM at the time of the merger, and the distrust and dislike of the KLM people towards Air France was almost palpable.

    The sooner KLM can rid itself of the rotting stinking albatross of Air France around its neck, the better.


    Edski777
    Participant

    No matter what KLM personnel, passengers or shareholders may prefer: the chances that Air France will let KLM go are minimal. KLM and other Dutch parts of the group are what keeps the group afloat despite all the strikes by what is increasingly regarded as unwilling and unrealistic personnel and unions and highly incompetent French management.
    Financial newspapers report that each day Air France strikes will cost the group € 25 to € 30 million. Airfrance/KLM group is expected to operate at a loss this financial year.

    Futhermore, Airfrance/KLM reports that in April 2018 the group had less passengers than in the same month last year. Air France transported 9% less passengers, KLM reports a growth of 5%. The total number of passengers dropped from 7 million in April 2017 to 6.9 million in April this year.

    To lose passengers in this current market compared to last year is quite a performance (not!).


    LuganoPirate
    Participant

    Very interesting. The article shows AF-KLM staff paid more than others, but the reality is it’s even worse, as AF staff are paid more than KLM staff for the same job. A friend of my son’s, also in a senior position at KLM, spent 6 months in Paris with a view to integrating their various systems. He said the staff were unbelievably lazy, arriving later, long lunches, breaks and leaving early. He doubted they did more than 4 hours a day, and even that was interrupted with personal phone call. No wonder AF staff outnumber KLM staff three times on a comparable basis.

    KLM paid ALITALIA €500 million I believe as a “deposit” for want of a better word towards the merger. As the Italian could not (refused is a better word) agree staff cuts etc KLM walked away and should have had their money back. They never did get it and are still waiting!

    However, the grim reality is that KLM cannot devolve itself from AF. The systems are linked, finance and leasing is cross-guaranteed by AF and KLM and so on. The truth is if AF goes bust, it will take KLM with it. That would be a sad and unfitting end to the worlds oldest airline!


    capetonianm
    Participant

    If it’s correct that KLM cannot rid itself of AF, then they will have to take the bitter pill of taking it over, liabilities and all, get rid of the useless staff and ‘managers’ and put their own people in to run it properly. Let the AF brand name disappear and France will be yet another third world failure with no national airline of its own. Whether French pride/arrogance will allow that to happen is questionable.

    I did some work on integrating the systems in about 2007, with both airlines, and the attitude of the AF people was exactly as described above by LP. The French were a waste of office space, utterly negative, always looking for problems and ways of avoiding work, and contributing nothing, whilst the Dutch worked hard and looked for solutions and a better outcome.

    Whereas the Dutch all spoke excellent English and were happy to do so, the French couldn’t or wouldn’t, even though it was made clear from the outset that the project language was English.

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BTUK September 2018
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