Dividends and Netherlands to provide aid for airline KLM

In 2004, for very good reasons the airlines Air France and KLM merged and it was good. Each of the airlines add jobs and economic developments to their countries, but in the background the Dutch thought the French favored their country a little bit more. When COVID happened and airlines were shut down or running on less than 5% capacity all the old rules fell. Any airline running on less than 5% capacity will need a bailout.

According to an article by Toby Sterling and Anthony Deutsch of Reuters, France was the first country to announce a E7 billion or $10.7 billion for Air France in April. The French believed the Dutch government should add funds and after numerous rounds of talks, the Dutch government will add E3.4 billion or $5.2 billion to the package. However, in order to ensure taxpayer money is paid responsibility and mostly on the Dutch side of the business, an observer to the Air France-KLM Group Board of Directors will be appointed.

The French government and the Dutch government each own 14% of the shares. Air France has 45,000 employees while KLM has 30,000. Both airlines are looking for those who can voluntary retire, before laying off workers.

Linking to dividend paying stocks, mergers are part of the process of business, there are very good reasons to gain in size. When the head office is not in the same city, there will be culture difference and city differences. If the company is profitable and many of the difference go on the back burner and can stay there for a long time. When companies are not profitable and cuts are to be made all the difference come to the forefront. When head office are in different countries, political inference is to be expected. Investing in a profitable company tends to avoid most of the differences.

There are more questions than answers, till the next time – to raising questions.

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