The Dutch government has purchased a 12.68% stake in Air France-KLM. This comes as the government wants to eventually match the 14.3% stake held by the French government. The share purchase is designed to protect the Dutch government's interests in the national airline. This reportedly follows disputes regarding the direction of Air France-KLM.

The move is understood to have upset the French Government, while Air France-KLM issued a statement regarding the purchase which had a fairly negative tone overall. The surprise announcement caused shares in the Air France-KLM group to fall by 11% in a sign that traders were also unhappy with the purchase.

Who is Air France-KLM?

Air France-KLM is a holding company which oversees both Air France and KLM. It is similar in nature to the International Airlines Group. IAG was formed by a British Airways Iberia merger in 2011. Air France-KLM was also formed by a merger of the two daughter airlines. This merger took place back in 2004.

The airline group is headquartered at Charles de Gaulle Airport in Paris. As such, it is a French incorporated company. Air France is the national carrier of France, while KLM is the national carrier of the Netherlands. Air France-KLM has offices in both France and The Netherlands.

Why Buy Shares?

The Dutch government decided to purchase the shares in the holding group following a recent disagreement. It appears that the Dutch did not feel they had a significant influence on the parent company of KLM. The Dutch are very proud of KLM which is more successful than its French counterpart, hence, they spent a total of €680m on the shares.

The Dutch Finance Minister, Wopke Hoekstra, said: "Buying this stake ensures we have a seat at the table." Indeed, if the Netherlands held an equal share as the French Government, they would theoretically have just as much say over the airline.

Air France-KLM
Air France-KLM Shares fell 11% at the news. Source: Apple Stocks

Unpopular Move

The move to purchase shares in Air France-KLM has been criticised by the French government. Specifically, the French Finance Minister, Bruno Le Maire, told how Air France-KLM should be "managed without national public interference". In a similar air the French President, Emmanuel Macron, believes the Dutch government should clarify its intentions.

The French government was only informed of the share purchase an hour before the news was reported publicly. According to reports, members of the French government feel that the deal was "more like that done by a corporate raider, rather than a state shareholder".

Air France-KLM
The French government is reportedly unhappy with the move. Photo: Air France

In a press release, Air France-KLM made it clear that they had not been consulted regarding the purchase of their shares. They went on to mention that "The Board of Directors will closely monitor the consequences of this new participation on the Group".

Do you think the Dutch purchase of Air France-KLM shares was acceptable? Let us know in the comments down below!