Coronavirus could trigger Air France-KLM split: report

The KLM management thinks that the current coronavirus crisis could mean the end of the Air France-KLM combination. According to the Dutch part of the combination, Air France needs to drastically cut costs, but it seems increasingly unlikely that the French airline will do so given the 7 billion euros bailout the French government is providing, people involved told Financieele Dagblad.

The relationship between the French and Dutch at Air France-KLM has been deteriorating for years, culminating in the fight to reappoint Pieter Elbers as CEO of KLM at the start of last year. KLM is annoyed that Air France is taking charge, while the airline itself is struggling much more than KLM. 

KLM wants Air France to get its finances in order by cutting costs. The financials of both airlines were brought into focus by the coronavirus crisis, which grounded almost their entire fleets while costs still need to be paid. At the Dutch airline, the conviction is growing that a split might be better, and for Air France and KLM to limit their relationship to coordination, according to the newspaper. 

On Friday, the French and Dutch governments announced that they will provide financial aid for their national airlines. These bailout packages showed that KLM thinks they'll be able to manage with a government-guaranteed loan of between 2 billion and 4 billion euros, provided that air traffic is back to 80 percent of normal by the end of next year. While Air France will get a 7 billion euros loan package from the French state, and there is still considerable doubt about whether that will be enough, according to FD.

Finance Minister Wopke Hoekstra and his French counterpart Bruno Le Maire both stressed that public money will only benefit their own airline.. This could theoretically result in two nationalized airlines, something KLM is taking into account, FD wrote. KLM doubts whether the two governments will be able to act jointly in a recapitalization, pointing out that the governments couldn't even coordinate the press conference on Friday. The Dutch press conference was held despite the negotiations with KLM on the aid package not being done yet, because France announced its support for Air France.