Ben Smith Skift Global Forum Preview: Air France-KLM CEO Ben Smith Reveals How He’s Winning Over Labor

what was then the world’s largest carrier by revenue, a series of CEOs has tried to keep the peace in Paris and Amsterdam. These executives allowed managers in each country to operate the carriers as they pleased while begging French unions to accept any deal that might make the company more competitive with EasyJet, Ryanair, and other low-cost carriers.” data-reactid=”22″ type=”text”>Since Air France and KLM merged in 2004 to create what was then the world’s largest carrier by revenue, a series of CEOs has tried to keep the peace in Paris and Amsterdam. These executives allowed managers in each country to operate the carriers as they pleased while begging French unions to accept any deal that might make the company more competitive with EasyJet, Ryanair, and other low-cost carriers.

But the current CEO, Ben Smith, arrived a year ago with a different mandate. Yes, he wants to make stakeholders happy, including employees and the two national governments. Yet Smith also wants to shake the malaise that has made Air France-KLM the worst-performing of Europe’s major airline groups, despite the storied history of both carriers.

“The main challenge going forward is, how do we get our brands to the top of the industry?” Smith said in a telephone interview.

KLM is not so far away. The Dutch airline was in rough financial shape before it merged with Air France, but since then it has thrived, leveraging its central hub in Amsterdam to attract lucrative connecting passengers from all over the world. Air France is a different matter, with the airline long crippled by labor issues, an inconsistent product, and an inefficient fleet, including 10 Airbus A380s it does not need.

Smith, who was chief operating officer at Air Canada, is trying to meld the company into a more cohesive group that can better compete across Europe. He’s had some successes, including with Air France labor unions, but he has also run into challenges. After reports in February indicated he wanted to force out KLM’s CEO, the Dutch government quietly amassed a 14 percent stake in the company to increase its leverage. The CEO, Pieter Elbers, remained.

Smith will speak Sept.18–19 at Skift Global Forum in New York City. We recently spoke with him to preview the discussion.

Note: The interview has been condensed and edited for length and clarity. 

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Skift: You spent most of your career at Air Canada, restructuring a smaller airline in relative anonymity. A year ago, you moved to Paris, and now the press reports, often critically, on everything that happens at the company. There’s intrigue, for example, about the contempt the Dutch and French sides may have for each other. Has this surprised you?

Ben Smith:There’s an enormous amount of focus on the inner workings of the Air France-KLM group. I think it has been totally blown out of the water and blown out of proportion by the media. It’s a big company. We have 84,000 employees. I think what’s very special and unique about Air France and KLM is that they both have very strong ties to the aviation industry in each country and strong ties to the national pride in each country and are icons in each country. In the United States, there really isn’t a flag carrier left. The one that really carried the U.S. flag was Pan American. Look at the businesses that exist today. The big four airlines in the U.S.— Delta, United, American, Southwest — they’re not flag-carrying airlines.

Air France and KLM are flag-carrying airlines. That has a very different emotional appeal. It means a lot more to the country whether they fly or they don’t fly a route. Of course, France and the Netherlands have very different cultures. I’m the first non-French CEO, and we’ve been trying to move to a clearer, more businesslike managerial governance. Naturally, when you’re trying to instill change, some people get defensive. But the real focus here is to leverage the enormous support in both countries. Not every other jurisdiction has that. It is a huge plus.

That’s how we’re trying to shift the focus foward. There’s nothing wrong with being nationalistic and loving and supporting your own flag carrier. I think more and more people are remembering that the strength of these two brands together fro