Netherlands surprises France by taking minority stake in Air France-KLM

Feb. 27 (UPI) -- The Netherlands took the French government by surprise Tuesday with an announcement it's buying a near 13 percent stake in the Air France-KLM group to protect national interests.

The $774 million deal protects Dutch interests at Amsterdam's Schiphol airport, the third-busiest airport in Europe behind London Heathrow and Paris' Charles de Gaulle. The Dutch government has previously said it didn't have enough influence on company strategy.

"Buying this stake ensures we have a seat at the table," Dutch Finance Minister Wopke Hoekstra said Wednesday.

The French government, which owns a 14 percent stake in the airline group, said it was surprised by the deal and only found out about an hour before it was announced. French economy minister Bruno Le Maire said the Air France-KLM board and the French government were kept in the dark.

The Netherlands said it will increase its stake in the company to match France's.

"The position of Schiphol and KLM are of great importance to the Dutch economy and employment," Hoekstra said. "It involves thousands of direct and indirect jobs."

Air France and KLM merged in 2004 but continue to operate under their own banners. Until now, the Dutch had only a 6 percent stake in the KLM subsidiary while France owned a stake in the parent company.

Labor strikes involving Air France have rippled throughout both countries as the airline lost money, and a new CEO was brought in without Dutch input.

"Over the past few years it has become obvious that important decisions about KLM strategy are being taken at a holding level," Hoekstra said. "At the same time, talks about strengthening existing agreements ... and the make-up of the board, have been difficult."

The Air France-KLM board of directors was set to meet Wednesday to discuss the deal. Delta Air Lines and China Eastern Airlines each have about a 9 percent stake in the Air France-KLM group.

Aviation analyst Eric Pels questions whether the move gives the Dutch any greater significant influence.

"It cost a lot of money, you don't have a majority and you can't sit in the chief executive's seat," Pels said. "Operational decisions, the day to day affairs, are not taken together with shareholders."