March 1, 2019 / 5:55 PM / 5 months ago

UPDATE 1-Dutch state seek seats on Air France-KLM board

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PARIS, March 1 (Reuters) - The Dutch government will seek seats on the board of Air France-KLM to increase its influence over the airline’s strategy, the Dutch government said in a statement to French stock market regulator AMF on Friday.

On Tuesday, the Netherlands took Air France and the French government by surprise by buying a 14 percent stake in the airline - almost matching the France’s 14.3 percent stake - in a move to counter French influence in the airline.

“Through its shareholding, the Dutch state intends to influence future developments at Air France-KLM in order to ensure that the national interests of the Netherlands are respected,” the Dutch government said.

It said it would seek board representation proportional to its shareholding.

The AMF said the Dutch state had informed it on Friday that it now held 60 million of the Air France-KLM’s shares and controlled 11.91 percent of its voting rights.

It said the Dutch state was not planning to buy more of the airline’s shares and was not planning to take control of the company.

“By becoming an Air France-KLM shareholder, the Dutch state shows its commitment to the success of the firm and supports management in its drive to improve the company’s performance,” the Dutch government said.

The Dutch government’s move follows a confrontation with the company’s French-dominated executive board over waning Dutch influence.

Air France and KLM merged in 2004, but KLM has always maintained an independent corporate structure within the group.

The KLM subsidiary, backed by The Hague, had balked at attempts by Air France-KLM group’s new Canadian Chief Executive Ben Smith to move towards deeper integration.

Air France this month reported full-year operating earnings of 266 million euros, compared with 1.07 billion euros at the KLM subsidiary.

The group has trailed rivals Lufthansa and British Airways on profitability, held back by restrictive French union deals and strikes that last year wiped 335 million euros off earnings and forced out its CEO. (Reporting by Geert De Clercq; Editing by Elaine Hardcastle and Jane Merriman)

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