March 6, 2019 / 6:06 PM / 15 days ago

KLM boss seeks to ease airline row under mocking gaze of Ryanair

BRUSSELS (Reuters) - The head of Dutch airline KLM sought on Wednesday to ease a Franco-Dutch row over share purchases in parent group Air France-KLM by the Dutch government - as low-cost airline chief Michael O’Leary gleefully stoked the embers of the dispute.

Ryanair CEO Michael O'Leary holds a news conference in Machelen near Brussels, Belgium October 9, 2018. REUTERS/Francois Lenoir

France, which owns 14 percent of the airline group, clashed with the Netherlands when the Dutch government abruptly bought a matching 14 percent stake in order to counter French influence over a group disproportionately heavily reliant on KLM profits.

“It’s too early to (know) all the exact consequences and the exact impact. What’s important is that we continue to do our work,” KLM chief Pieter Elbers told reporters in Brussels.

Speaking on the sidelines of an Airlines for Europe conference, he said there was a “good atmosphere” with colleagues at Air France and that he had a good relationship with Air France-KLM Chief Executive Ben Smith.

Air France-KLM was born from a Franco-Dutch airline merger in 2004 in the hopes of creating a European champion, but has been hit by repeated French pilot strikes and uneven profits.

Tensions between French and Dutch partners came to a head when recently appointed Smith declined to give assurances sought by the Dutch in a meeting in The Hague on Feb. 15, sources have said.

Shortly afterwards, the Dutch government took Paris by surprise by buying a 14 percent stake in the airline - almost matching the France’s 14.3 percent stake.

The move drew a furious response from French politicians, though many analysts noted that state intervention is also a common feature of the French corporate landscape.

“It’s good that some of these discussions have been clarified in the last couple of weeks, we can move forward now,” Elbers said.

The Dutch government said last week it would seek seats on the board of Air France-KLM to increase its influence over the airline’s strategy.

Manoeuvring at state-backed airlines like Air France-KLM and Italy’s struggling Alitalia drew derision from the head of Europe’s largest low-cost airline, Ryanair boss Michael O’Leary.

O’Leary joked during a panel at the conference that he would like to see more state involvement in airlines and poked fun at Alitalia, the Rome carrier that is looking to be rescued.

“I would positively encourage state involvement in the ownership of airlines. I compete with Alitalia in Italy,” O’Leary said, adding French President Emmanuel Macron should increase France’s stake in Air-France KLM to spark a bidding war.

“And we can sit back and enjoy the show.”

Reporting by Alistair Smout and Tim Hepher; Editing by Mark Potter

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