Air France-KLM Said to Weigh Changing Dutch Head for New Era

(Bloomberg) -- 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.

Smith, who took the helm of the holding company in September, is keen for the heads of the Air France and KLM units to work closer together and back his drive to centralize more operations, said the people, who asked not to be identified discussing private plans. For example, the CEO wants to end the current practice of the airlines separately negotiating plane purchases and alliances, they said. French media La Tribune first reported Thursday that Smith may be pushing for Elbers’ departure.

Air France-KLM Said to Weigh Changing Dutch Head for New Era

Elbers’s current contract expires at the time of KLM’s April annual general meeting and the deliberations are focused on whether or not to extend his four-year tenure, the people said. The Dutch national is concerned that KLM will be dragged down by its worse-performing partner, one person said. The two national carriers merged in 2004, and have operated semi-independently since then, with the French government owning a 14 percent stake.

Supportive Petition

Air France-KLM declined to comment. A spokeswoman for KLM said Elbers’s future was a matter of concern at the airline, and almost 13,000 people have so far signed an online petition calling for him to stay on.

While Smith, a 47-year-old Canadian, took over Air France-KLM at a time of labor turmoil and costly strikes that claimed the job of his predecessor, a truce with most unions and progress with pilots have allowed him to turn his attention to other parts of the business. Challenges include tension surrounding higher profit margins at KLM, which Smith has made clear he wants to resolve.

Read More: Air France-KLM CEO’s Labor Truce Pays Off as Shares Outperform

To that end, Smith is seeking to join KLM’s supervisory board, according to one person familiar with that matter. That’s likely to be opposed by executives at the Dutch carrier, who have sought to to maintain independence from its French partner in the past.

In a sign at how politically charged the issue has become in the Netherlands, the Dutch government sent a letter to KLM’s supervisory board to praise Elbers’ record, Finance Minister Wopke Hoekstra said on Friday.

Air France-KLM shares have gained 10 percent this year, following a 30 percent plunge in 2018. They traded down 4.1 percent at 10.28 euros at the close in Paris, valuing the carrier at 4.4 billion euros ($5 billion).

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