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Air France-KLM's new CEO Benjamin Smith (photo: Air France-KLM)

CEO: Bring Air France and KLM closer

The new chief executive makes his first conference call with analysts, starting to outline a new vision.

It’s time Air France-KLM’s French and Dutch wings started behaving like a single company, thinks the group’s new chief executive, the news agency Bloomberg reports.

Ben Smith started work last month, arriving 14 years after the two airlines merged.

In his first conference call with analysts, he said the group’s first priority is to resolve labour tensions that have led to countless strikes in recent years and to build a business that is as tight as its merged rivals.

Air France has been making deals with unions, but the trickiest, with its pilots, is yet to come.

“The more we can do to optimise and do what most major groups do when they consolidate, that’s obviously our goal,” the former Air Canada executive said. “Any internal struggles should be addressed as quickly as possible.”

Profit margins
The conference call was made as the group reported a decline in third-quarter earnings. KLM had an 18% profit margin in the third quarter, which Smith says is “adequate”, but it is just 11% at Air France.

The two united carriers, which Smith described as a “unique set up”, means the two still operate as separate entities – unlike merged airlines in North America.

The European groups IAG and Lufthansa also contain distinct carriers, but these are dominated by a single member. Air France, on the other hand, is far less profitable than the smaller KLM, Bloomberg points out.

Smith said that both Air France and KLM must lift profitability, and that although the two operate in different tax and regulatory environments they should not be so far apart.

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