The showdown that began weeks ago between France and Brussels is about to find its end. According to the daily The echoes from Friday March 26, Paris and the European Commission would have agreed on the amount of the counterparts to the financial aid provided to Air France. “There is an emerging agreement, but nothing signed”, we admit on the side of the company.
Originally, Brussels wanted to impose on Air France-KLM compensation of the same magnitude as those imposed on Lufthansa. The German company had been forced to give up 24 daily slots, landing and take-off slots, at two of its main airports, in Frankfurt and Munich. For weeks, Paris has been battling to obtain lesser concessions. The French authorities in particular stressed that, unlike the two German airports, the number of slots at Orly airport is limited.
Ultimately, Air France will not only have to give up fewer slots than its rival Lufthansa, but in addition it will be able to hand over more to the pot at Roissy than at Orly. According to our information, the agreement reached between Paris and Brussels should be ratified by the board of directors of the airline in the first days of April. “The management asked us to block dates”, confirmed an administrator.
Capital increase
On the other hand, nothing has yet been done on the side of KLM. The Dutch authorities have not agreed with the European Commission on the extent of the concessions that the company will have to make, in particular on its Amsterdam-Schiphol base, in return for the financial aid which has so far saved it from bankruptcy.
After the counterparty stage, Paris and The Hague will have to agree on the new governance of the company. On the occasion of the recapitalization of Air France-KLM, France should convert its financial contribution into a capital increase. The state should increase its stake to 30%, against 14.3% today.
Not sure that the Netherlands, which holds 14% of the shares, are accompanying this movement with an increase of the same magnitude. In February 2019, the Dutch had taken the capital of Air France-KLM by surprise. Better, more than two years after this unfriendly intrusion, the Netherlands, which now benefit from double voting rights, can claim an additional director.
The management of Air France as well as the pilots of the company would not be in favor of it. They recall that unlike France, which provided financial assistance to Air France-KLM, the Dutch authorities only provided assistance to KLM. In addition, The Hague has shown itself to be much poorer than Paris. To find a solution, the two capitals could turn to the Franco-Dutch working group created after the Netherlands stock market raid on Air France-KLM.