Fin prématurée du partenariat commercial entre Air France-KLM et CMA CGM : les raisons et les conséquences

[Article published on Tuesday, January 16, 2023 at 08:512 and updated at 10:45]. Less than a year after the effective start of their cooperation in air freight, Air France-KLM and CMA CGM (owner of La Tribune) announced that they were terminating their partnership due to a “constrained regulatory environment in certain important markets (which) did not allow the cooperation to function optimally”. However, it is worth noting that the capital alliance, established in the spring of 2022 alongside the development of this commercial partnership, is not called into question.

Intended to last for ten years, this exclusive strategic commercial agreement did not last long. The objective was to “pool their complementary cargo networks, the capacity of their all-cargo aircraft, and their dedicated services” they explained at its launch.

“Air France-KLM and CMA CGM have opened discussions on the new terms and conditions of a commercial relationship in which each group would operate independently from March 31, 2024”, specify the two groups.

As a result, they will be able to continue cooperation, but on a much smaller scale than the level of integration and the scope originally planned by their previous strategic alliance. They will become commercial players like any other, able to be partners or competitors depending on the different markets.

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The American failure

This premature end is mainly due to the difficulties faced by the two partners in obtaining antitrust immunity from the U.S. government, in order to fully deploy their partnership in the United States and North America. This was particularly the sine qua non condition for CMA CGM to integrate the transatlantic joint venture between Air France-KLM, Delta Air Lines, and Virgin Atlantic in the cargo sector (parallel to that set up for passenger transport).

This could have been a turning point, given the importance of this joint venture (highest level of cooperation before a merger, a quarter of capacity offered on the transatlantic route before the health crisis).

The difficulties faced by the two groups in obtaining this immunity seem to be partly explained by the protectionism of the Biden administration, with the U.S. President making it a full-fledged part of his “Bidénomics” . In addition, there are U.S.-Dutch disagreements over the limitation of the number of flights at Amsterdam-Schiphol airport. American companies strongly opposed a reduction in the ceiling, especially the newcomer JetBlue whose time slots were threatened. This led them to request countermeasures from the U.S. Department of Transportation (DoT) against KLM.

The deterioration of market conditions throughout the freight sector, after the exceptional years of 2021 and 2022, also did not make it easier to continue this extensive cooperation. Despite a small improvement at the end of 2023, the market declined throughout the year in terms of rates and volume. And the redeployment of capacity in the cargo holds of passenger aircraft did not help the players with all-cargo aircraft.

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CMA CGM leaves the Air France-KLM board

CMA CGM remains a 9% shareholder of Air France-KLM and the two groups do not show any signs of disengagement for the time being. However, the end of the commercial partnership has consequences.

CMA CGM’s stake in Air France-KLM was inherently linked to this partnership. Hence the need to establish a new clause of “closed-door” for the shares held by the Marseille logistics group. This will now be effective until February 28, 2025. This secures for the time being this capital attachment, with any disengagement being prohibited until then, although it is four months less than initially planned (June 2025). Similarly, the additional clause for the retention of 50% of the shares until 2028 has been canceled.

Meanwhile, CMA CGM will leave the Board of Directors of Air France-KLM on March 31, 2024. This decision is explained by competition reasons, as it is implied from both sides: CMA CGM being required to become a competitor of Air France-KLM in the cargo sector, it cannot sit on its most strategic body.