KL, NW, CO join SkyTeam announcement

[erict]

Rumors are going around that all 3 of these airlines are going to join the SkyTeam Alliance. This is supposedly going to be announced some time next week. Monday?

Has anyone heard anything about this?

[DrSyn]

It appears to run deeper than that, erict, as rumours of a merger between KLM and Air France have been cropping up for a while now. According to this morning's Sunday Telegraph (UK broadsheet), KLM and Air France are now "close to merger".

The article, which headlines the STel business section, begins, "KLM . . . . and Air France are at an advanced stage in talks that could lead to a merger as early as this week." Interesting prospect, n'est ce pas?

Full article here (http://www.money.telegraph.co.uk/money/main.jhtml?xml=/money/2003/09/14/cnklm14.xml&menuId=242&sSheet=/money/2003/09/14/ixfrontcity.html).

[Otterman]

The rumour mill at work is telling us that on September 18 there is expected to be a major announcement in regards to the Air France / KLM tie-up. Sounds like a new holding entity will be created in which Air France will be the major shareholder. This new holding will become the owner of both outfits. Basically it will be a model that will allow KLM to retain it brand and landing rights, but in essence it will have been taken over by Air France.

A natural thing would be that on that same day the Wings Alliance will be officially declared dead (de facto the case for awhile), and the Wings partners will align themselves with the Delta/Air France led Sky team. As most of you know this was coming for a while in that NW and CO and Delta have aligned themselves in the USA, and they got approval (for most of what they wanted to do) last year. This newly enlarged alliance will become the largest one in the world.

And for those involved on the blue side, 84 years of independence comes to an end. We gave it our best shot.

Regards O.

[erict]

Wow. This is going to cause a few ripples.

Anyone see MAS joining SkyTeam in the future?

[GK]

This is suppose to be a equal merge and the new corporation will dilute the shares owned by the French government. AF staff are all very excited about it.

[roswellnut]

The Dutch couldn't make it work with the Italians (remember the aborted KLM/Alitalia deal) and won't make it work with the French. So yes that announcement will be made on Sept 17 but the whole thing is a disaster waiting to happen. The mentalities are way too different. Can someone tell me what will happen when AF goes on strike(as they do many times each year). The French are impossible to deal with and the Dutch think the're the most perfect people on the planet. Watch the soap unfold!

[Final 3 Greens]

Otterman

Nothing personal, but KLM's best wasn't good enough in recent years.

I used to be a Royalwing member and was messed about badly on more than one occasion.

The result is that I haven't taken a KL flight for nearly 2 years.

I'm sure that you flight deck guys were very good (safety record suggests that), but your commercial and customer facing ops colleagues were not up the the difficult task of competing post 9/11.

I hope that you come out of any deal better positioned than the people at Buzz.

[Otterman]

It is indeed the case that KLM’s product has suffered these past few years. Apparently you have found another airline that has been able to meet your needs, good for you. I am under no illusion that there is any airline out there which has gotten better in any respect since 09-11.

I am always amazed when I speak to an individual passenger they often mention being disappointed by another carrier because of bad experiences in the past, and how we are meeting their needs now. I always imagine my colleague at that other airline speaking to his passenger and being told about the bad treatment he/she has gotten at KLM. This perception has proven itself many times over in the past.

The majors carry such phenomenal numbers of passengers that we are bound to fall short on a daily basis at the individual level (despite our best efforts). Most of the time I am sure the airline involved is directly responsible, but we are the point of contact for a lot of other services that are required to allow us to fly from point A to point B. No excuse, just a fact of life we live with. WE as front-line people do the best we can with the tools we are given. The world situation and the economic realities has hit our industry right between the eyes, this can’t have escaped anyone’s attention, certainly not someone who regularly checks this bulletin board.

The passengers main concern these days is price; the traditional carriers are in the process of adjusting their product to this market reality. This is not only an adjustment for our traditional passenger, it is a major adjustment to the people who have worked in this industry long enough to remember the good days as well. Those days of old are gone. Low cost within Europe is here to stay; they have carved their niche. The passenger has spoken. For us at the “old” world carriers we are either going to sink or learn to swim p.d.q. It looks like KLM won’t be able to make that transition without belonging to one of the three large alliance groups that have formed this past decade. I anticipate (ok, hope) that KLM will be able to remain a player in this new world. Albeit that it won’t control its own destiny like it has in the past.

When I say we gave it our best try I mean that the people at KLM have been able to built a respected airline based in one of the smallest countries in Europe. We were a prominent presence in the international airline business for most of our 84-year existence, but surrounded by much larger countries with strong home carriers we have to make choices. I hope and think we are pragmatic enough to make those choices.

I am curious if the passengers will be better off, when in a few years time more than 80% of the world’s traffic will be fed through the networks of three very large alliances. The newly enlarged Sky team (with the addition of NWA, Continental and KLM) will control well over 300 million passengers per year. Makes one think (does me at least).

I am sure there are a good number of people whom will gloat at the demise of KLM’s independence. I can even understand some of those people’s motives. In most situations I try to put myself in the other blokes shoes, before I try to make a judgement (first wondering whether it is appropriate to even do so).

But I think it is premature to talk about us in the past tense. Nowhere in any of the communication that I have seen is there talk of KLM being absorbed or disappearing as a brand in the near future. Nothing goes that quickly in the aviation business.

I hope we flight crews will continue giving you the best we have. It certainly is my intention.

Regards, O.

[Golf Charlie Charlie]

<<<
But I think it is premature to talk about us in the past tense. Nowhere in any of the communication that I have seen is there talk of KLM being absorbed or disappearing as a brand in the near future. Nothing goes that quickly in the aviation business.
>>>

Western, Northeast, Pan American, Eastern, Braniff, British Caledonian, Dan Air, Cambrian, TWA, Air Inter, UTA, Trans Australian, Canadian/CP Air........

[erict]

Golf Charlie Charlie has a point.

Swiss International Airlines is also in a pretty tight spot.

Lets see how this courtship with Lufthansa works out.

[Otterman]

GCC, all the merger or take-overs that you mention are within national borders. This is a huge difference. Some in Europe might like to think of us as one large state, but the truth is far removed from that ideal.

Lets say it is a traditional take-over like you in the Anglo-Saxon based economies are used to. The disappearance of the KLM brand might not be a smart move for the new entity. It is a well-established brand, which can serve its own useful purpose. The fallout from the position that France took in the latest Iraq war: with boycotts of French products and also travel to France by the American population proves that. Remember the passenger is used to travelling on different brands on the same tickets, since the advent of all these alliances. So there is no brand dilution here. It is just the Sky team that is moving them around. Most of the airlines that were merged or taken over were bankrupt or in bankruptcy protection or were just in very poor shape. KLM is far from being on its deathbed. We are continuing our investment in the company, with the first Boeing 777 arriving next month and continuing at one a month for a while. Six new Airbus 330-200 are coming in 2005. A new Boeing 747-400 freighter will be here next spring. The situation it finds itself in is that it is not aligned with one of the big alliances and in order to do so will have to make some radical changes. If our board decides that this is the best move, so be it. But we don’t come with empty hands. In the Dutch paper this past Saturday there was an interview with our COO in which he said that the KLM brand would remain.

In the future I think the large alliances will be like the big car makers are now. GM has many sub-brands: Chevrolet, Pontiac, GMC, Buick, Oldsmobile, Vauxhall, Opel, etc. This works in their advantage, with each representing something different to its customers. But being recognizably under one umbrella.

Also I am hard pressed to come up with a precedent when it comes to an international merger, in the airline industry. A lot of things will have to be safeguarded, most of all our landing rights. Even though KLM is a publicly traded company the Dutch government has the right to increase its shareholding to 51% in order to block any take-over or merger. What we are hearing is that the government has been kept in the loop from the beginning and apparently has no objection with the proposal as it is now. To me this means it is satisfied that the national interest will not be hurt by what the KLM board apparently wants to do.

I am not saying that I am very enthused by the thought of being owned by a French company. The cultural differences are huge, and it will take a lot of convincing to get comfortable with the idea. But I don’t believe that we will become one company in the short term, and seniority discussions are something that is still a ways in the future. To begin with I am sure there will be firewalls to insulate both companies at the operational level. First you pick the low hanging fruit. But we will know shortly what is up.

Regards, O.

[A/P Disc]

Will the KLM pilots get the same treatment
like the KLM UK pilots when they were integrated with
BUZZ/KLM?

I suspect that the KLM pilots want horizontal entry
onto the Air France seniority list (o dear I mentioned
the S. word....)

I doesn't seem very likely and to be honest if the
French can save 1 of their own jobs at the cost
of 10 Dutch ones guess what is going to happen?

According to a Frech government report they
consider Schiphol Airport as the third airport of
Paris! Very encouraging.

And Otterman:

Look at the balance sheets. KLM has got a couple
of years left before the light goes out. They have
been making losses for the last 5 or 6 years in a row
and the cash in hand went down from €1.5 Billion to
about 700 million this year. If you loose +/- 450 million
a year you can do the math yourself.

KLM is big in Holland and very small in the world:
a fact which they do not understand.

Rgds

[erict]

Here you go guys. This is getting interesting as expected. :O

Air France-KLM equity swap could include Alitalia
Dateline: Wednesday September 17, 2003

Speculation on a KLM-Air France linkup is heating up with reports that Alitalia also will hold a board meeting today to discuss the state of its alliances with other airlines, including swapping up to 30% of its shares with AF and KLM.

Alitalia Chairman Giuseppe Bonomi last week said the company is looking at "consolidating" its alliance with AF in a move that could lead ultimately to a merger deal with other partners, such as KLM.
"The board is meeting [today] to give its blessing to an integration with AF and KLM. The management have asked the Treasury to make a 20%-30% stake available in time for the talks," a source close to the airline told Reuters. Alitalia denied it was making such a request but confirmed its board will meet to talk about alliances, among other issues.

Italian Industry Minister Antonio Marzano yesterday said he believes an alliance among Alitalia, AF and KLM will take place. The government holds 62% of the Italian carrier.

[Final 3 Greens]

Otterman

I am always amazed when I speak to an individual passenger they often mention being disappointed by another carrier because of bad experiences in the past, and how we are meeting their needs now

Well, if KLM wanted to get my business back, it could reinstate flights from STN to AMS, since the convenience factor was high and I buy on this factor, not price. My interest is Europe to the US.

I am not going to travel to LCY to fly on a slow, uncomfortable steam driven turboprop and if I have to go to LHR, then I will travel with a truly global airline, whose premium products are in a different class to KLM.

Having said that, I realise that none of this is under the control of flight deck, so I wish you well, but don't be in denial like your ground ops people.

[JW411]

Otterman:

Having read your rather condescending outpourings some months ago on the subject of the "absorption of KLMUK by KLM mainline thread", how are you feeling now that you are on the wrong seniority list?

I never worked for KLM UK but I have a good friend who did and he has been treated rather badly ever since he followed your advice and "moved over".

Enjoy the merger!

[Lemurian]

Hello everybody
I am still amazed,after all these years,by how shortsighted or bigotted some of you could be at times.
First of all,no one here in France is thinking about painting the tricolour flag on KL's Sky-blue aircraft.That would be pure madness,as the basket of traffic rights KLM has can complement,and very nicely AF's,and it will be lost should KLM's brand disappear.
KLM is bringing AF a lot of muscle where they have been the weakest,namely Northern Europe where LH is weaving a formidable network through Star Alliance.The same can be said for Asia or Eastern Africa (that AF/KL could well become N°1 player in that region).
Secondly,KLM's been the most successful predator in Europe :With no domestic traffic per se,they have so far managed very well to prey on other countries passengers.That strength became a weakness after Sep 11 2001 when their transatlantic traffic fell apart and they had no other solution to fall back on .
Even in this weakened state,they still represent about 10% of AEA traffic,compared to 16-17 % for LH,BA or AF.Small fry indeed!
Thirdly,It is idiotic to think of Schipol as "the third Parisian airport".
It makes more sense to see it as a more efficient hub aimed at competing with LHR and FRA.For Skyteam,to be top boss on two of the four great hubs of Europe -and those with the greatest growth potential-can not be dismissed.
Discussions have started at pilot unions' level between the French and the Dutch flight deck crews.The subjects :job protection,standards....NOT seniority.
Lastly,AF,in spite of our repeated strikes is doing quite well.OK,without the strikes we would have given BA and LH a wilder run for their money...In the mean time,we still see a growing tendency for Brits to travel AF...Cherchez l'erreur,les amis!
Otterman,I think you could bring us a lot and I for one am looking forward to welcome you,not aboard but at our side.
Cheers
Orlando