France has said it was taken by surprise by the Dutch government’s sudden purchase of a 12.68% stake in Air France-KLM.
Shares in the airline company fell by 11% on Wednesday, after the Netherlands government said late on Tuesday it was acting to protect “Dutch interests”.
The Dutch aim to match France’s 14.3% stake in the airline.
French Finance Minister Bruno Maire has warned it should be “managed without national public interference”.
According to French reports, the government in Paris was informed of the Dutch move only an hour before a press conference on Tuesday night, and after the shares had been bought.
“Buying this stake ensures we have a seat at the table,” Dutch Finance Minister Wopke Hoekstra said of the move, which cost about €680m (£583m; $774m).
The justification, he said, was to protect Dutch economic interests and jobs – particularly regarding Amsterdam’s Schiphol airport. Schiphol is Europe’s third busiest airport after London Heathrow and Paris Charles de Gaulle.
Reacting to the shock news, French economy minster Bruno Le Maire said neither the Air France-KLM board nor the French state had been consulted.
“It is essential to respect the principles of good governance and for Air France-KLM to be managed without state interference,” he said.
Why the surprise move?
Air France-KLM was formed out of a merger of the two national flag carriers in 2004 – though the airlines themselves have continued to operate under their own separate banners.
Until now, the Netherlands held only a 6% stake in KLM – the smaller subsidiary – while France owned 14.3% of the parent company.
The surprise move from the Dutch came after a series of disagreements in which the Dutch felt they did not have enough influence in the holding company, which was deciding strategy.
Disagreements between the holding company and KLM management have been made public in the past year – mainly about the autonomy of the Dutch airline.
Strikes in France in 2018 caused company-wide losses, much to KLM’s frustration, and brought in a new CEO at the holding company, Ben Smith, who has championed tighter integration between the French and Dutch wings.
In recent weeks, reports emerged that the position of KLM’s CEO Pieter Elbers could be under threat because of his vocal support for keeping the two operations separate.
Last week, the group announced a “goal of simplifying and improving the governance”, part of which involves increasing collaboration.
French financial newspaper La Tribune characterised the sudden move by the Netherlands as a “thunderbolt” and a “coup”, and wrote that the fear is the merged entity “will be held hostage by two shareholders each with a different strategic vision”.
The Air France-KLM board of directors was expected to meet on Wednesday to discuss the fallout.
Delta Air Lines and China Eastern Airlines each hold a 8.8% stake in the company.