French, Dutch ministers pledge to strengthen Air France-KLM

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France's Finance Minister Bruno Le Maire, right, prepares to shake hands with his Dutch counterpart Wopke Hoekstra, right, after a joint press conference held at the Finance ministry in Paris, France, Friday, March 1, 2019. The Dutch and French governments sought to smooth over tensions over the future of Air France-KLM after the Dutch government suddenly expanded its stake in the alliance to increase its sway over the company's future. (AP Photo/Christophe Ena)

The Dutch and French governments kicked off a four-month project Friday aimed at making Air France-KLM more competitive — and at easing tensions between the two countries after the Dutch government's surprise purchase of a new stake in the airline alliance without informing Paris.

The Netherlands' finance minister, Wopke Hoekstra, and his French counterpart, Bruno Le Maire, held hurriedly arranged talks Friday in Paris and afterward both ministers pledged to cooperate to strengthen the uneasy alliance.

Le Maire, who described the discussions as "frank and clear," said the two countries would work together "to improve the competitiveness of the group Air France-KLM and to make Air France-KLM a big success."

KLM has cut jobs and costs and is more profitable than Air France, where an extended pilots' strike last year shaved 335 million euros ($382 million) off revenue last year. The alliance as a whole is facing competitive pressure from low-cost airlines and growing Asian and Gulf carriers.

The two governments announced four months of consultations led by French and Dutch finance ministry officials to study the company's ownership structure and management and how to protect the hubs at Amsterdam's Schiphol Airport and Paris' Charles de Gaulle Airport. In a statement Friday, they said the outcome of the discussions "must be a fair and balanced one for all sides."

KLM's success is closely intertwined with that of Schiphol Airport on the edge of Amsterdam; together, they generate tens of thousands of jobs and billions of euros in revenue.

Air France-KLM shares rebounded after the announcement Friday, having sunk earlier this week amid concerns about the stability of the alliance.

The Dutch government raised its share in the alliance this week to 14 percent without telling the French, angering France's leadership.

The Dutch state had already owned a 5.9-percent stake in KLM, the national airline of the Netherlands. The decision to raise its share was intended to give the Dutch side more influence over the partnership's future.

The French government also owns a 14-percent stake in the alliance, but Le Maire called the secretive Dutch move "incomprehensible" and French President Emmanuel Macron demanded clarification.

Hoekstra didn't explain why the Dutch government didn't discuss the purchase with French partners, saying only that the move had been discussed between KLM and the Dutch government. He said that the purchase showed his government's commitment to the business and its partnership with France.

"We'll look at the future," he said. "We want to build a better company and we want to make sure the interests of both countries are taken into account."

Showing his commitment to both airlines, Hoekstra tweeted later Friday that he flew to Paris on Air France and back home on KLM.

The two governments pledged support for Air France-KLM CEO Ben Smith, who has worked to settle labor disputes with Air France pilots since taking over last year.

The tensions reflect cultural differences in the two countries' economic approach. The Netherlands has a long tradition of businesses working with labor unions and, where necessary, government to improve efficiency. France has extensive protections for workers and sees frequent conflict between unions seeking to save those protections and company management.

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Corder reported from The Hague, Netherlands. Nicolas Garriga in Paris contributed.