Jetty
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Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 4:01 pm

Air France-KLM is discussing whether to replace Dutch unit head Pieter Elbers over concerns he may not fully support Chief Executive Officer Ben Smith’s plans to strengthen ties between the two carriers, according to people familiar with the matter.

https://www.bloomberg.com/news/articles ... or-new-era

More background in French: https://www.latribune.fr/entreprises-fi ... 06563.html

And Dutch: https://www.parool.nl/amsterdam/klm-per ... ~a4622814/

The French are making a serious mistake if they fire KL CEO Elbers. He has delivered much better results than AF and has unanimous support from employees, unions, the Dutch government and was repeatedly named best CEO in The Netherlands. Ben Smith is right that he doesn't support further integration, nobody at KL does. The first thing is for AF to show they can make a decent profit and have an extended period without strikes so KL know they have a sustainable future when integrating further with AF.
 
Flanker7
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 4:55 pm

There's a petition within KLM going around to support a second term. Staff fear to much influence from me Smith if Elbers goes . Personally I like him to stay, he's done a great job over the past years.
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FlyRow
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 4:58 pm

KLM/Elbers have also got support from the Dutch goverment, stating that he is the right man and that they have something to say as a large shareholder.
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chonetsao
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 5:26 pm

Would this lead to the break up of AF KL marriage?
 
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GEUltraFan9XGTF
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 5:29 pm

Could KL leave AF and merge "more" somehow with DL, leaving AF in the lurch?
 
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mercure1
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 5:39 pm

Closer integration is way overdue.

So much is wasted by duplication of functions at both airlines.

If they want to keep two brands, that is ok, but essentially all the back office functions should be one.
mercure f-wtcc
 
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FlyRow
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 5:44 pm

GEUltraFan9XGTF wrote:
Could KL leave AF and merge "more" somehow with DL, leaving AF in the lurch?


Difficult as you have a foreign ownership limit (EU is "one" country in this regard)
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FlyRow
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 5:47 pm

mercure1 wrote:
Closer integration is way overdue.

So much is wasted by duplication of functions at both airlines.

If they want to keep two brands, that is ok, but essentially all the back office functions should be one.


True, but KLM rightly says we cut staf, increased productivity and efficency, meanwhile the strikes in france have cost the company millions upon millions of dollars while no improvement is really made.
It's not just taxes that are better in the Netherlands that cause the difference, as the french love to say, they really did improve.

KLM (rightly) fears that they have to improve so the french can keep their favourable working conditions, and that growth in air france should be earned and not demanded.
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Jetty
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 5:52 pm

mercure1 wrote:
Closer integration is way overdue.

So much is wasted by duplication of functions at both airlines.

If two airlines are driven to bankruptcy by striking employees or exorbitant taxes then even more is wasted. With the current state of Air France, the French business environment and the motivation of AF staff KL can’t be expected to jeopardize it’s future by becoming more dependent on AF where to new CEO just caved in to most union demands, effectively to be payed by KL’s profits.
 
Flanker7
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 6:09 pm

My biggest fear is that ultimately KLM will be relegated to a B airline regardless what Smith says. Unfortunately KLM cannot get out of this marriage. Let the French first show they can be consistent in making a profit and not strike.
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Jetty
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 6:09 pm

GEUltraFan9XGTF wrote:
Could KL leave AF and merge "more" somehow with DL, leaving AF in the lurch?

DL could buy 50% -1 share if AFKL is willing to sell because they recognize the combination does more bad than good. With DL having a major stake in AFKL as well this would give them near to effective control, and independent of AFKL they’d need the support of only one individual shareholder for a majority vote. Technically there are some options without AFKL approval as wel, but those requires more urgency than a debate about the CEO.
 
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Re: Air France-KLM Wants to Change KL CEO

Fri Feb 08, 2019 6:14 pm

AFKL Group needs to become more like LH Group, where yes things are much more integrated.

Keeping the core brands is fine, but there indeed must be hundreds of million € that can be saved by consolidating functions, and removing duplication across all the different AOCs - AF mainline, AF regional, KL mainline, KL Cityhopper, Transavia Holland, Transavia France, Martinair, etc.
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Jetty
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 5:36 am

Now we might see a strike at KL because they want to keep their CEO. How different than AF where they strike to get rid of them. :)

Long simmering tension within Air France-KLM erupted into the open after managers at Dutch arm KLM warned of possible strikes and employee unrest should Pieter Elbers be removed as head of the unit.

https://www.bloomberg.com/news/articles ... ceo-elbers
 
jetblueguy22
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 5:49 am

Brilliant, get rid of the guy running the stable part of the business. What a mess of a company
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5NFGS
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 6:42 am

Oh dear, Elbers has done a wonderful job with KL so far, meddlers leave him be!
Monsieur Smith, welcome from Canada.
You were brought to fix the Air France bit of AIR FRANCE-KLM.
Just the Air France bit.

Sincerely,
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keesje
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 7:39 am

Mr Smith shouldn't be charmed / bought into the position he's reorganizing the more cooperative / productive part of the company, the easy way. He might lose his job, blow up the merger doing so.

KLM did realize far reaching effiency operations, cutting costs and jobs over the years. AF unions striked their way out.

KLM wants to remain cooperative, but not at all costs / being used. If required the government can step in to protect local interest. Thank god they were smart enough to not completely hand over all the "golden share" rights at the time.
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MrBren
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 7:46 am

AF saved KLM. It's now time to be a true group, and keep both prides aside.
 
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PatrickZ80
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 7:49 am

Flanker7 wrote:
Unfortunately KLM cannot get out of this marriage.


Technically, they can. It'll be difficult, but since Air France-KLM owns a minority stake of 49% in KLM, if all other KLM shareholders agree to break free from Air France-KLM they can do this.
 
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Taxi645
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 7:56 am

Would SAS been a better merger partner for KLM?


https://en.m.wikipedia.org/wiki/Alcazar_(airline)


Seems like a better match regarding culture and work ethic.
Last edited by Taxi645 on Tue Feb 12, 2019 8:22 am, edited 1 time in total.
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 7:59 am

5NFGS wrote:
Oh dear, Elbers has done a wonderful job with KL so far, meddlers leave him be!
Monsieur Smith, welcome from Canada.
You were brought to fix the Air France bit of AIR FRANCE-KLM.
Just the Air France bit.

Indeed, Smith shouldn't try to fix something which ain't broken. On the contrary, watch and learn, I'd almost say to him.

keesje wrote:
Mr Smith shouldn't be charmed / bought into the position he's reorganizing the more cooperative / productive part of the company, the easy way. He might lose his job, blow up the merger doing so.

KLM did realize far reaching effiency operations, cutting costs and jobs over the years. AF unions striked their way out.

KLM wants to remain cooperative, but not at all costs / being used. If required the government can step in to protect local interest. Thank god they were smart enough to not completely hand over all the "golden share" rights at the time.

KLM fears Smith wants to use the profits earned by KLM to fill the holes made by AF. In other words, KLM employees fear they will be paying bills created by inefficiencies/strikes at AF. Elbers has asked sacrifices from KLM employees, but promised a higher share in profits as return. He kept his promises, that's why employees like him and the unions respect him. Smith however, has said the higher profits made by KLM were only generated as a result of lower taxes in The Netherlands.

Dutch government has now contacted their colleagues in France about Elbers' position.
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Flanker7
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 8:26 am

MrBren wrote:
AF saved KLM. It's now time to be a true group, and keep both prides aside.


And KLM saved AF bacon over the years so level pegging.
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keesje
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 8:48 am

MrBren wrote:
AF saved KLM. It's now time to be a true group, and keep both prides aside.


Non-sense. KLM has always been profitable, also before the merge. AF is the one that had to be saved by the french state, every 4-5 years. They payed some 747s from the balance to suppress profits / taxes / salary demands in the nineties.
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cv990Coronado
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 8:56 am

My perception from the outside looking in and from the comments in this thread, this merger looks like a marriage made in hell. In contrast to Lufthansa's takeover of LX and OS which doesn't seem to generate venomous comments. Is this a cultural thing of a matter of execution I wonder?
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 9:03 am

What's the stake that both States have on each airline?
 
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 9:08 am

cv990Coronado wrote:
My perception from the outside looking in and from the comments in this thread, this merger looks like a marriage made in hell. In contrast to Lufthansa's takeover of LX and OS which doesn't seem to generate venomous comments. Is this a cultural thing of a matter of execution I wonder?


LH took over LX and OS, while KLM and AF merged, that alone is a difference. But in the end control of the combined group of AF/KLM needs to be centralized.

This includes common fleet and route planing, onboard products, service standards and so on.
 
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 9:21 am

LAXintl wrote:
AFKL Group needs to become more like LH Group, where yes things are much more integrated.

Keeping the core brands is fine, but there indeed must be hundreds of million € that can be saved by consolidating functions, and removing duplication across all the different AOCs - AF mainline, AF regional, KL mainline, KL Cityhopper, Transavia Holland, Transavia France, Martinair, etc.


LH fired the Belgian SN CEO and put a German lady in his stead, and staff were againat all of this, resulting in poor morale. How is the LH Group different?
 
Waterbomber2
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 9:29 am

Imo KLM is a poorly run airline.
Poor product, poor service, low salaries. They can make a profit in this low fuel environment but nobody is happy. Not the customers, not the staff.
Their operations lack the slack.
There just isn't anything great with it.
AF is losing money due to poor management. KL may not be losing money but it has reached a dead end as an airline, there is no vision, no strategy, no willingness.
They might as well put a snowman as CEO, nobody would notice a difference.

AF and KLM have a merged management.
Management positions are intertwined. For every AF VP there is a KL vice VP and vice versa.
At management level, AF and KLM are one and the same airline.
So KLM management is just as responsible for AF's losses as AF management.

https://www.airfranceklm.com/en/group-e ... -committee

It's also a known fact that Elbers wanted to call the shots at AF-KLM and not only KLM and hence yhere might be rivalry with Smith.
 
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 9:55 am

Waterbomber2 wrote:
Imo KLM is a poorly run airline.
Poor product, poor service, low salaries. They can make a profit in this low fuel environment but nobody is happy. Not the customers, not the staff.
Their operations lack the slack.
There just isn't anything great with it.
AF is losing money due to poor management. KL may not be losing money but it has reached a dead end as an airline, there is no vision, no strategy, no willingness.
They might as well put a snowman as CEO, nobody would notice a difference.


Brand new aircrafts, aircrafts always clean and in good condition. Very effective service in terms of punctuality and quality. Their staff always look quite happy and smily contrary to what you sometimes see on AA, UA and DL, for example.

Their product is quite good and, the only thing you could consider, in comparison to Air France, is that somehow (maybe just an impression) their seat pitch is slightly cramped and their Premium Economy is not that great (inexistent to say the least).

You could add the fact that sometimes you may get a bit more of a stroppy treatment from their cabin crew but, having worked with a lot of Dutch and Flemish people, I kind get that they are like this but, having said that, this is beyond me saying that they ar enot great, efficient and corteous (I prefer the Air France Staff because they treat me well but, hey, I can speak French and people sometimes say OI look like one even though I am not so there might be somthing in it)


All in all, I fail to understand your comments on the state of KLM and their quality which is, at minimum, at level pair with AF and LH with one interesting difference (between others...) - They DO NOT GO ON STRIKE
 
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 9:59 am

mercure1 wrote:
Closer integration is way overdue.

So much is wasted by duplication of functions at both airlines.

If they want to keep two brands, that is ok, but essentially all the back office functions should be one.


I don't agree.

They are very much apart from each other on culture and work ethics.AF is also saddled by their unions and work disputes with the subsequent heavy burden on pay/benefits.

To merge them now would be only so that KLM could effectivelly pay for these AF Problems

LH effectivelly took over LX and OS and still run them separately.

AF/KL is a merger so it would be even more detrimental. If at least AF and KL were on same level pegging on internal organization and performance, I would say yes but this is far off.
 
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frigatebird
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 10:16 am

Jomar777 wrote:
their Premium Economy is not that great (inexistent to say the least).

It is indeed inexistent - because KLM doesn't have Premium Economy! What they do have is standard economy seats but with some extra legroom (34-35"), which they call Economy 'Comfort'. a True Premium Economy product has specific seats, wider, at least 36" seat pitch, and better service. Not sure why KLM decided against this, I suppose it wasn't worth it. Too bad.

Jomar777 wrote:
Waterbomber2 wrote:
Imo KLM is a poorly run airline.
Poor product, poor service, low salaries. They can make a profit in this low fuel environment but nobody is happy. Not the customers, not the staff.
Their operations lack the slack.
There just isn't anything great with it.
AF is losing money due to poor management. KL may not be losing money but it has reached a dead end as an airline, there is no vision, no strategy, no willingness.
They might as well put a snowman as CEO, nobody would notice a difference.


Brand new aircrafts, aircrafts always clean and in good condition. Very effective service in terms of punctuality and quality. Their staff always look quite happy and smily contrary to what you sometimes see on AA, UA and DL, for example.

Their product is quite good and, the only thing you could consider, in comparison to Air France, is that somehow (maybe just an impression) their seat pitch is slightly cramped and their Premium Economy is not that great (inexistent to say the least).

You could add the fact that sometimes you may get a bit more of a stroppy treatment from their cabin crew but, having worked with a lot of Dutch and Flemish people, I kind get that they are like this but, having said that, this is beyond me saying that they ar enot great, efficient and corteous (I prefer the Air France Staff because they treat me well but, hey, I can speak French and people sometimes say OI look like one even though I am not so there might be somthing in it)


All in all, I fail to understand your comments on the state of KLM and their quality which is, at minimum, at level pair with AF and LH

He probably had a bad flight experience.

Jomar777 wrote:
with one interesting difference (between others...) - They DO NOT GO ON STRIKE

YET. So far, strikes have been avoided, but it's not that Dutch unions have never threatened to use this weapon. If Elbers is forced to leave by Smith, this could start unrest with KLM staff, and Smith won't be able to avoid strikes easily - because KLM employees and unions won't trust him IMO. If Smith indeed ousts Elbers, he'll regret it mightily - he just has to realise it yet.
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 10:17 am

I always avoid KLM at any price, the food is just so untasty, almost junk food. And the seat pitch, just a nightmare. Easyjet is even better for the seats.
 
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 10:23 am

Waterbomber2 wrote:
LAXintl wrote:
AFKL Group needs to become more like LH Group, where yes things are much more integrated.

Keeping the core brands is fine, but there indeed must be hundreds of million € that can be saved by consolidating functions, and removing duplication across all the different AOCs - AF mainline, AF regional, KL mainline, KL Cityhopper, Transavia Holland, Transavia France, Martinair, etc.


LH fired the Belgian SN CEO and put a German lady in his stead, and staff were against all of this, resulting in poor morale. How is the LH Group different?

The Belgian SN CEO and CFO were doing their job perfectly and steered the airline well during the Belgian Airport bombing few years ago. SN managed to record consecutive profits and good load factor, growing network and fleet. All these despite all those hand-me-down aircraft from LH Group and all those banged up aircraft from lessor. Both of them fell victims to LH Group boardroom drama when they fought the Group plan to further integrate SN into LH and be make SN secondary airline, hand over routes and fleet to EW. Good lesson for AF-KLM to be careful....
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flyjohnnyt
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 10:34 am

MrBren wrote:
I always avoid KLM at any price, the food is just so untasty, almost junk food. And the seat pitch, just a nightmare. Easyjet is even better for the seats.



I have to agree with this somehow. I fly both KLM and AF on short hauls and long hauls (on business class). AF is far better in long haul catering and also their business class seats (if you are lucky to get the reverse herringbone) and their crew are elegant.

However I think that where the advantage stops. KLM is far better in all their short haul flight - new planes, clean, friendly and helpful staff and efficient service (unlike AF short hauls). The let down of its long haul flight is the business class seat which despite being comfortable, lack privacy and direct aisle access. The service again is always friendly and you can just tell from a passenger's point of view this is a well run airlines.
 
TYCOON
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 10:45 am

keesje wrote:
MrBren wrote:
AF saved KLM. It's now time to be a true group, and keep both prides aside.


Non-sense. KLM has always been profitable, also before the merge. AF is the one that had to be saved by the french state, every 4-5 years. They payed some 747s from the balance to suppress profits / taxes / salary demands in the nineties.


Sorry, just not factually correct. Dutch fake news! I worked for many years in aviation finance in the 90s and during those years had KLM, Transavia AND Martinair as my clients. I successfully financed a number of KLMs widebodies in that period, and they were not very profitable and finding financing for them at that time was not easy. The margins they had to pay on their loans were double what Air France had to pay to reflect the perceived risk. The merger happened shortly thereafter...
Personally, I love both airlines and I have always found flight crew at both KL and AF to be very pleasant, as are the ground staff. But they really need to integrate more (back office etc) but definitely keep their respective brands.
 
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keesje
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 10:51 am

flyjohnnyt wrote:
MrBren wrote:
I always avoid KLM at any price, the food is just so untasty, almost junk food. And the seat pitch, just a nightmare. Easyjet is even better for the seats.



I have to agree with this somehow. I fly both KLM and AF on short hauls and long hauls (on business class). AF is far better in long haul catering and also their business class seats (if you are lucky to get the reverse herringbone) and their crew are elegant.

However I think that where the advantage stops. KLM is far better in all their short haul flight - new planes, clean, friendly and helpful staff and efficient service (unlike AF short hauls). The let down of its long haul flight is the business class seat which despite being comfortable, lack privacy and direct aisle access. The service again is always friendly and you can just tell from a passenger's point of view this is a well run airlines.


I can understand the WBC perception. KLM is always studying how to most efficiently serve those passengers good enough for them to come back. Passenger research could show what's most important e.g. price, network, schedule, sleeping comfort, timeliness service, schedule reliability. That could mean you don't put that additional crew member in business class for 4 steps meals and personal attention. You could, but you would be become less profitable, like AF. And loose focus on what's real important for the passengers.
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76er
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 10:54 am

MrBren wrote:
I always avoid KLM at any price, the food is just so untasty, almost junk food. And the seat pitch, just a nightmare.


All true. But at least the cabin crew do completely ignore you if your do not happen to speak the local language, they fly on time and very rarely go on strike. Plus they are 100% flatbed in widebody C while AF doesn't and even still have the unforgivable 2-3-2 in Business on many longhaul aircraft.
 
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keesje
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 11:10 am

TYCOON wrote:
keesje wrote:
MrBren wrote:
AF saved KLM. It's now time to be a true group, and keep both prides aside.


Non-sense. KLM has always been profitable, also before the merge. AF is the one that had to be saved by the french state, every 4-5 years. They payed some 747s from the balance to suppress profits / taxes / salary demands in the nineties.


Sorry, just not factually correct. Dutch fake news! I worked for many years in aviation finance in the 90s and during those years had KLM, Transavia AND Martinair as my clients. I successfully financed a number of KLMs widebodies in that period, and they were not very profitable and finding financing for them at that time was not easy. The margins they had to pay on their loans were double what Air France had to pay to reflect the perceived risk. The merger happened shortly thereafter...
Personally, I love both airlines and I have always found flight crew at both KL and AF to be very pleasant, as are the ground staff. But they really need to integrate more (back office etc) but definitely keep their respective brands.


I was there too. The financing risk on AF was probably lower because french government back-up was guaranteed if things went south. While the Dutch government demonstrated less industry loyalty those days. As you probably know, They cashed a billion from NWAC that needed a place. KLM had an anti cyclic fleet purchasing schedule.

Image
https://www.aviationstrategy.aero/newsletter/Jul-2000/4/KLM%3A_its_unequal_struggle_to_join_the_Euro-elite

The reason for the merger was size & home market. At least that is what the board members told. KLM decided it was better to negotiate a deal from a position of strength, than being "absorbed" when you have problems (ref. Fokker).
Last edited by keesje on Tue Feb 12, 2019 11:18 am, edited 2 times in total.
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Flanker7
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 11:17 am

Waterbomber2 wrote:
Imo KLM is a poorly run airline.
Poor product, poor service, low salaries. They can make a profit in this low fuel environment but nobody is happy. Not the customers, not the staff.
Their operations lack the slack.
There just isn't anything great with it.
AF is losing money due to poor management. KL may not be losing money but it has reached a dead end as an airline, there is no vision, no strategy, no willingness.
They might as well put a snowman as CEO, nobody would notice a difference.

AF and KLM have a merged management.
Management positions are intertwined. For every AF VP there is a KL vice VP and vice versa.
At management level, AF and KLM are one and the same airline.
So KLM management is just as responsible for AF's losses as AF management.

https://www.airfranceklm.com/en/group-e ... -committee

It's also a known fact that Elbers wanted to call the shots at AF-KLM and not only KLM and hence yhere might be rivalry with Smith.

You really need to do your homework. The wages are very good and there's a lot of pride and dedication amongst staff. Judging by the amount of compliments the get passenger are happy to fly them.
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Revelation
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 11:49 am

cv990Coronado wrote:
My perception from the outside looking in and from the comments in this thread, this merger looks like a marriage made in hell. In contrast to Lufthansa's takeover of LX and OS which doesn't seem to generate venomous comments. Is this a cultural thing of a matter of execution I wonder?

The cultural element is a prominent one.

You can read the comments in this thread and learn the Dutch are thrifty and industrious whereas the French are profligate and lazy.

Meanwhile Germans, Swiss and Austrians are more of a mono-culture.

Clearly AF-KLM is a marriage of convenience.

Both partners have kept their old apartments as a hedge against the marriage failing, which is also a sign that both sides expect the marriage to fail.

The marriage hasn't failed yet for the same reason it was formed: both partners feel they can't make it on their own, yet both partners can't find more suitable partners.

So indeed the marriage from hell continues with the hallmark being indifference if not apathy, with skirmishes largely kept behind doors, with the exception of occasional public outbursts like this one.
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GCT64
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 11:54 am

You only have to read this thread to see the problem (as it is described above "Both partners have kept their old apartments as a hedge against the marriage failing").
You don't need to change the brand, the cabin crew style etc. but you do need to get the efficiencies behind the scenes (in the way the IAG has or is doing: unify the cargo operation, purchasing, IT, fleet configuration etc.). You can't do this if both are trying to keep their structures intact.
The last time I compared the market cap of the Lufthansa Group, IAG and AF-KL it was pretty clear which one the investors didn't like, didn't believe in and didn't think would make money.
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 12:00 pm

Revelation wrote:
The cultural element is a prominent one.

You can read the comments in this thread and learn the Dutch are thrifty and industrious whereas the French are profligate and lazy.

Meanwhile Germans, Swiss and Austrians are more of a mono-culture.

Clearly AF-KLM is a marriage of convenience.

Both partners have kept their old apartments as a hedge against the marriage failing, which is also a sign that both sides expect the marriage to fail.

The marriage hasn't failed yet for the same reason it was formed: both partners feel they can't make it on their own, yet both partners can't find more suitable partners.

So indeed the marriage from hell continues with the hallmark being indifference if not apathy, with skirmishes largely kept behind doors, with the exception of occasional public outbursts like this one.


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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 12:11 pm

Revelation wrote:
Meanwhile Germans, Swiss and Austrians are more of a mono-culture.


Guess, you never heard Austrians or Swiss talk about Germans. And to be honest I think many at OS, LX and SN would really not be sad if LH would not run the show, but they also know, that it creates benefits that make their own position better than without LH.

I think this understanding of common benefits is completely missing from the AF-KLM partnership which are much more in competition.
 
oceanvikram
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 1:41 pm

I do believe it is a cultural issue.

Example 1
I have worked with French expats in Australia. They were seconded from a super major French oil and gas company. The way these expats behaved with us locals was very much condescending. Their view was that we Australians did not know anything and yet we have done more oil and gas developments in our own country than they have done in Africa. (An exaggeration, but you get the point.)

Example 2
Today our government signed a deal with a French company for some submarines for our Navy. My understanding is that our Defence Minister refused to talk to or discuss this venture with his French counter part for at least a year. (Please correct me if I am wrong.) Now is it normal for a AUD50billion defence deal to go ahead where the 2 Defence Ministers are not talking each other? The Australian media deems it as a cultural issue. But you got to hand it to the French, they got the deal immaterial of the cultural issues during the negotiations.

There are French companies who provide the best product and/or service in their industry in the global market. But working for them or with them, is not easy. Here is the irony, I have worked for French managers in an Australian company and a British one and they are were the best managers I have worked for. The funny thing is that they refuse to work for French companies.

Now sitting on my Chairman's toilet seat, yes there are a lot more synergies that can made and will put Air France-KLM group in a much stronger position. But if this synergy is to take place, I hate to say it, will be KLM personnel who will be the majority of the ones to get sacked. Imagine if Air France did that, there would be strikes by not only the Air France unions but also teacher's union, anaesthetist's union, investment banker's union and god knows how many others. (An exaggeration, but you get the point.)

As an aviation enthusiast, if Air France does start having influence on the management of KLM via Air France-KLM Group, I fear it will be the end of KLM as we know.
 
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 1:45 pm

This is a power struggle that needs to be restated in a larger context, and should probably be blamed on group management rather than one or two individuals. Timeline:

  1. As part of the changes at the top with the arrival of Ben Smith, Pieter Elbers was to be made his deputy (a new position within the group) and would be responsible for IT, maintenance and alliances.
  2. Informed (reportedly) days before starting his new position, Smith tells the AF-KLM board he would like to have a say in the governance of the group and wants to get to know management before changes are made.
  3. After he has been in office barely long enough to turn on his new computer, Smith is strongly criticized by the head of KLM's work council, Jan Willlem van Dijk. Given the close relationship between him and Elbers, insiders suspect the latter to have "guided" the former (to be fair, AF union criticism of Smith started well before that, but no one's ever said AF management was close to its union reps).
  4. Contrary to expectations, the KLM board does not nominate Smith to a seat.
  5. Rumors that Smith is unhappy with Elbers and that Elbers' contract may not be renewed start.

There are clear strategy differences between the two men for the airlines of the group. Smith wants a closer alliance between the airlines, notably in far more joint purchases, including aircraft, Elbers does not. When there is a clash over strategy between the head of a group, and the head of one part of the group, typically the head of the group does not end up the loser...

On the other hand, insiders claim that if Smith is nominated by the KLM board, Elbers' contract would get renewed, and Elbers would be less... hostile to the group strategy.

Times will tell.

(sources: people - supposedly - in the know, and Les Echos)
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TurboJet707
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 2:46 pm

76er wrote:
(...)But at least the cabin crew do completely ignore you if your do not happen to speak the local language (...)


I trust you meant to write "don't completely ignore you"

It would be weird if KLM staff would ignore anyone who doesn't speak Dutch, as they would need to ignore 99,99% of the world's population then.
My experience with KLM staff (cabin, flight deck and ground) is that they all speak perfect English and have a very international orientation. I have flown KLM many, many times and every time I have the impression that the majority of the passengers is not Dutch, whatever the origin or destination is. If they would really ignore non-Dutch speakers, they wouldn't have survived for almost 100 years.

I must add that I am Dutch myself.
 
CaliguyNYC
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 2:55 pm

Waterbomber2 wrote:
Imo KLM is a poorly run airline.
Poor product, poor service, low salaries. They can make a profit in this low fuel environment but nobody is happy. Not the customers, not the staff.
Their operations lack the slack.
There just isn't anything great with it.
AF is losing money due to poor management. KL may not be losing money but it has reached a dead end as an airline, there is no vision, no strategy, no willingness.
They might as well put a snowman as CEO, nobody would notice a difference.

AF and KLM have a merged management.
Management positions are intertwined. For every AF VP there is a KL vice VP and vice versa.
At management level, AF and KLM are one and the same airline.
So KLM management is just as responsible for AF's losses as AF management.

https://www.airfranceklm.com/en/group-e ... -committee

It's also a known fact that Elbers wanted to call the shots at AF-KLM and not only KLM and hence yhere might be rivalry with Smith.


Sorry don't agree with you at all. Are there tings KLM could do better, sure. But they are much better than AF. I go out of my way to connect through AMS. I like DL the best but then KL. AF is a distant third. Plus when there is IRROPS, KLM mostly functions like DL in solving issues quickly. AF, well is AF.
 
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 3:10 pm

TurboJet707 wrote:
76er wrote:
(...)But at least the cabin crew do completely ignore you if your do not happen to speak the local language (...)


I trust you meant to write "don't completely ignore you"


You are right, my bad. I meant to say the AF cabin crew are the ones doing the ignoring. Sorry for the confusion.
 
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vhtje
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 3:27 pm

GCT64 wrote:
The last time I compared the market cap of the Lufthansa Group, IAG and AF-KL it was pretty clear which one the investors didn't like, didn't believe in and didn't think would make money.


Excellent point.

The market capitalisation of these three as at 12/02/2019 is as follows:

IAG: £13.014B GBP > ~$16.75B USD
LHA: €10.521B EUR > ~$11.88B USD
AF: €4.411B EUR > ~$4.98B USD

Source: Bloomberg/Reuters
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Miquel787
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 3:59 pm

Waterbomber2 wrote:
Imo KLM is a poorly run airline.
Poor product, poor service, low salaries. They can make a profit in this low fuel environment but nobody is happy. Not the customers, not the staff.
Their operations lack the slack.
There just isn't anything great with it.
AF is losing money due to poor management. KL may not be losing money but it has reached a dead end as an airline, there is no vision, no strategy, no willingness.
They might as well put a snowman as CEO, nobody would notice a difference.

AF and KLM have a merged management.
Management positions are intertwined. For every AF VP there is a KL vice VP and vice versa.
At management level, AF and KLM are one and the same airline.
So KLM management is just as responsible for AF's losses as AF management.

https://www.airfranceklm.com/en/group-e ... -committee

It's also a known fact that Elbers wanted to call the shots at AF-KLM and not only KLM and hence yhere might be rivalry with Smith.

Get your facts right before you post this bullshit..Are you working at KLM? KLM makes money and the staff started a petition to keep CEO Elbers.
 
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Re: Air France-KLM Wants to Change KL CEO

Tue Feb 12, 2019 4:40 pm

GCT64 wrote:
You don't need to change the brand, the cabin crew style etc. but you do need to get the efficiencies behind the scenes (in the way the IAG has or is doing: unify the cargo operation, purchasing, IT, fleet configuration etc.). You can't do this if both are trying to keep their structures intact.
The last time I compared the market cap of the Lufthansa Group, IAG and AF-KL it was pretty clear which one the investors didn't like, didn't believe in and didn't think would make money.

There is a fundamental difference beteren AF/KL and LF/IAG. The latter fully own the group airlines. AF/KL doesn’t fully own KL. Albeit it’s only a minority that is owned privately and by the Dutch government it does make a big difference: if AF/KL as majority shareholder forces decisions at KL that go against the interest of the minority shareholders they can be stopped by court intervention. This has happened before. A current example of how this matters: KL has money in the bank while AF/KL has a debt. On group level the logical thing to do is clear the debt with the reserves of KL. But this isn’t in the interest of KL itself thus likely could be stopped. No such issues at other airline groups.

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