Post-acquisition:Covers the results of the operation, whether the deal was a success or a failure and looks at corporate culture as well as financial aspects。
1. Source:
There is a great difference on power distance
between France and the Netherlands; France scored 30 points higher on this than
the Netherlands. This difference can be traced back in the hierarchy of the two
countries. Noorderhaven (personal communications, March 4, 2009) indicated that
Air France is more hierarchical than KLM, and that KLM sees it this way as
well. Thus, KLM is less hierarchical, which Air France calls chaos. Leo van
Wijk (2005), CEO at KLM during the merger, ratifies this by saying that the
French are more skillful in hierarchical thinking than the Dutch; what does the
boss want to hear? Dutch instead start the discussion with interpreting and
manipulating of what the boss is thinking. He also states that Dutch people
like to have a roadmap upfront, to know what they are up to, while French
people see what they get, often coming in need of time, but due to their
inventiveness and improvisation they make it work. In a way the Dutch are not
capable of doing so. Referring to the hierarchy in the two countries, Van Wijk
(2005) said that the French work more top-down, while the Dutch want to have a
voice as well, being more democratic. Uncertainty avoidance and power distance
are in this case related to each other; on both points France scored higher
than the Netherlands. Hofstede (Bergen, 2002) mentioned the management of Air
France to be much more centralized at the CEO, accustomed to power and
compliance. Thereby, in France public servants and business leaders are often
the same people. Van Wijk (Izaks, 2004) confirms this by saying that in the
Netherlands there is ‘poldermodel’ with four statutory directors at KLM, while
France has an Anglo-Saxon background where the CEO is chairman of the Board of
Directors and of the commissioners, being able to operate as an absolute ruler.
Employee perspective
Employees’ willingness to cooperate The
willingness of employees to cooperate, a reflection of their satisfaction, in
very important when working together and integrate successfully. In KLM’s
public report of 2005-2006, KLM states the satisfaction of employees concerning
Air France and the method to monitor this satisfaction; KLM has developed a
questionnaire to be conducted quarterly. The respondents are employees who
actually work together with French colleagues. KLM also states that training
courses are organized when problems are encountered within joint teams of Air
France KLM staff. Cultural Bridging has been developed, being a form of
mediation. KLM also stated in this public report that an external agency which
compiles a benchmark using inquiry results from several companies, surveys
KLM’s staff satisfaction. Findings of their research in 2005 showed, according
to KLM, that 98% of the staff is positive about the cooperation with Air
France. Mentioning that staff is convinced that the airline combination
achieves more together than operating on itself. Besides, KLM stated staff to
be proud, motivated and confident about the future with Air France and eager to
make it work. Monin, Noorderhaven and Rouzies (2008) investigated the
willingness to cooperate (α = 0.77), pre-merger identification (α = 0.83) and post-merger identification (α = 0.85) during the Air
France KLM merger; showing employees being slightly more positive concerning
the merger after the merger than before the integration. See
appendix two for empirical measurements.
Half a year after the merger the satisfaction
among French employees working at the cargo business started to decline (Del
Canho & Engelfriet, 2008). This business was led by a Dutch manager, and
the French employees got the feeling that they had to do it ‘the Dutch way, due
to changes in the way of working; o.a. the English working language (Del Canho
& Engelfriet 2008). Through lots of sessions a task force of top cargo
managers listened to these issues and jointly settled different concerns, o.a.
by facilitating communications through offering more language courses (Del
Canho & Engelfriet 2008). Del Canho & Engelfriet (2008) stated that the
moral regained quickly. Another example is an occasion in which a KLM manager
wanted to adopt the rule that emails had to be replied within 24 hours, widely
used by KLM. However, at Air France calling each other is the most common way
of communication when you need something. The request was declined. The
suggested new way of working was both sending an email and then calling or
sending the email the recipient’s secretary, who in turn will print and deliver
it to her boss. In this way both methods of the companies were inserted, to
create most satisfaction.
2. Culture conflict:
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Air France has not yet recorded operating profit since march 2008, it’s KLM’s profit that has kept the group to breakeven in recent years.
KLM: In the year to Mar-2005, the first financial year after the merger with Air France, the KLM Group’s revenue was EUR6,442 million. This rose by 50% to reach EUR9,688 million in the year to Dec-2013 (the group changed its year end from Mar to Dec in 2011). KLM’s share of Air France Group revenues increased from 24% to 38% over this period.
However, KLM’s operating result fell by 36% and its net result by 48% over the same period. In fact the intervening years saw considerable volatility in both revenues and in profits as the airline cycle peaked before the global financial crisis and then came crashing down in 2009 (KLM’s year to Mar-2010).
KLM incurred net losses in the years to Mar-2009 and Mar-2010, but only suffered an operating loss in the second of these two years. Since then, it has consistently made an operating profit, but at lower margins than before the crisis. In FY2005 to FY2008, KLM’s operating margin rose from 7.2% to 9.4%. Since the crisis, its highest margin has been 4.4% and its 2013 margin was only 3.1%.
Air France: 14 days pilot strike 2014: Of course, the impact of the weak market environment was multiplied substantially by the damaging effect of the pilot strike, which hit the 3Q2014 operating result by EUR330 million, according to Air France-KLM.
This industrial action, which lasted for 14 days in Sep-2014, led to the cancellation of 18% of the month’s passenger capacity (measured in ASKs) and 16% of the month’s cargo capacity (measured in ATKs). It lowered the group’s 3Q traffic revenues by EUR416 million, but only EUR86 million of costs were avoided (primarily fuel costs saved through lower activity).
3. pandemic and state loan

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