Air France wins KLM takeover bid

[wink wink]

Air France 'wins KLM takeover bid'
26 September 2003
AMSTERDAM — The Cabinet has reportedly approved Air France's takeover bid of KLM after being allayed of concerns that Schiphol Airport in Amsterdam would suffer at the expense of Charles de Gaulle in Paris.

Cabinet sources said that after meeting with both airlines on Wednesday night the responsible ministers were convinced that Schiphol could maintain its present market position, newspaper De Volkskrant reported.

But Schiphol remains concerned about the takeover, claiming that 15 percent of its flights might disappear to the Paris airport and the Transport Ministry denied on Friday that the government had already approved the Air France deal.

The Dutch State is the largest Schiphol shareholder — maintaining also a 14.1 stake in KLM — and could therefore block the takeover, but the Cabinet has reportedly backed the deal and will discuss the matter later on Friday before making an official decision next week.

Air France is to meet its works council on Monday, further fuelling speculation that an announcement might be imminent, the Financial Times newspaper reported.

And the deal, as it reportedly stands, will see the Dutch State retain control over KLM's fight rights via its so-called golden share, which will be transferred to the new company. This would serve to help protect Schiphol airport from being reduced to a "branch" of Charles de Gaulle.

Negotiations aimed at determining when that golden share control will officially lapse, are continuing.

KLM and Air France will retain their names, but will become two subsidiaries under one holding. KLM will obtain about 16 percent of the new company's shares and the French government will slowly reduce its 54.4 percent stake of Air France.

KLM chief executive will be appointed as the vice-president of the new company and Air France chief Jean Cyril Spinetta will become his immediate boss.

The takeover deal will see KLM enter into the Skyteam alliance, which already includes Italian flag carrier Alitalia and America's Delta Airlines. Skyteam will become the world's largest co-airline operative alliance following the inclusion of KLM.

Meanwhile, Van Wijk discussed the takeover with KLM employee unions on Wednesday night, ensuring workers that no extra job losses would occur as a result of the deal, NOS reported.

KLM is currently going through a restructuring process involving 4,500 job losses, but Van Wijk said the Air France takeover could create jobs, helping to ease union concerns.

[ICURA?]

In all the "mergers , take overs etc." that I've seen or been involved with the rhetoric from management has all been the same. "No change" "No job losses " "Better for the long term" They are the mantra from on top. But give it 6 months and the changes start first in admin, reservations, and maintenance with rationalization in these areas bringing job relocation and / or loss. After all the aim is to be more efficient (read.. more profit , bigger bonus) and the easiest way for management to achieve this is trhough restructuring in areas where there is duplication of services. How you reduce the work force is then just a matter of the right spin. BUT JOBS WILL BE LOST!! Will they be French ones or Dutch ones ? Knowing the French readiness to be militant in the work force(STRIKE) and the Dutch willingness to concilliate , (form a working group to study the problem) you can draw your own conclusions. Also remember the value of a guarantee given by any politician !!
Give it 5- 10 years and reread the above article and see just how much is reflected in reality. But if history is any thing to go by I bet that KLM then, will not much resemble the KLM of present . And not in a good way. We can only hope that this is the exception that proves the rule and that in the long term both sides profit.

[buzz boy]

quite right

the smaller company in any takeover always suffers, mind you it is kind of justice to KLM as they have always been so arrogant in the way they have treated competition and takeovers in the past they really deserve a taste of what is to come!!!(remember the AirUk takeover!!!)

The French really believe the world revolves around them and if KLM and their pilots believe they can influence things they have a rude awakening coming to them.

tel est la vie

Zulk is levens

[Final 3 Greens]

Agree with Buzzboy and AF is a major global player too - KL is not.

[A/P Disc]

STOP PRESS

Tomorrow morning 0700 CET it will be announced
that Air France will take over KLM.

Source: Reuters,CNN.

KLM as it is known now will be disbanded as a
Dutch company and will be a minority company in
a new French consortium with about 16% stake
in the shares.Rest will be Air France.
Landing rights Amsterdam will be with the Dutch
for 8 years.

World's oldest airline (1917) will be gone from
tomorrow.

Rgds

[Otterman]

Buzzboy your animosity towards KLM is something that I have gotten used to. The discussion surrounding Buzz/KLM UK died down after the dust settled. And I am still not sure what the outcome has been exactly at the individual level. From what I understand no one lost his or her job. A number of people are now flying in the new KLM Cityhopper group and some have chosen to continue with KLM mainline. The Buzz pilots are now with Ryanair (not sure what will happen to the Bae 146 crews) but it sounds like Ryanair will be growing enough for them to transfer to the 737. Earlier this year it had become clear that KLM did not have the finances to expand the Buzz brand, and a retrenchment of the business was in order. The arrogant Dutch have done things in a more equitable manner than BA has done with its regional pilots. That became clear after our last encounter on this topic. So I am not sure what your grievance could possibly be, beyond the fact that a “foreign” company bought Air UK all those years ago, and your life changed because of it.

KLM could have done things a lot differently, up to and including shutting down subsidiaries that were draining it of much needed cash. In the future I am sure I will be flying with some Dutch colleagues some of whom will be lamenting about how things used to be at KLM before we were bought out. Idealism usually grows around the past and things are remembered in a much better light than how they actually were. It is a negative spiral that can have no positive outcome.

Considering that KLM’s scale is too small too survive as a stand-alone company, there is no way on God’s green earth that Air UK would still have been around in the present aviation environment. KLM flies more international revenue kilometres than all but six other airlines in the world. In order of rank in 2002 for the top ten: BA, AF, LH, SQ, UA, JAL, KLM, AA, NWA, and Qantas). Our distinct weakness has been a lack of domestic size, and we are pretty much at the outreaches of were we could go. We have chosen to align with AF. The method chosen has been a take-over by AF of KLM. These companies on paper make a great fit. It is strategic in its intend, aligning two great companies who are in possession of two great strategic assets in AMS and CDG. They will combine to form the core of Skyteam, an alliance that will control almost 1 in 4 passengers travelling at any given time.

For the next five years, the name KLM will be around, after that who knows? For those five years I don’t expect too many changes at the operational level, after that we will see. I appreciate the vision, the gamble, and the guts that it took to take these decisions.

I realize you wish us nothing but the worst possible outcome, if that is getting you places, good for you. At no time have I shared these feelings towards my colleagues at KLM UK.

Regards, O.