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Air France-KLM Loses Fight Against EU Cartel Fine; Renews CEO Smith's Mandate And Names New KLM Boss

By Dave Simpson

Air France-KLM AIRF.PA and its Dutch subsidiary KLM have lost their challenge against million-euro fines re-imposed by EU antitrust regulators five years ago for taking part in an air cargo cartel two decades ago.

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Air France KLM said it was considering appeal against the decision.

Air France and 10 of its peers had in 2015 won their court fight against fines levied by the European Commission in 2010 for fixing air freight services, fuel and security surcharges between December 1999 and February 2006.

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The EU competition enforcer subsequently fixed procedural errors pointed out by the Luxembourg-based General Court and in 2017 re-issued the same penalties except for Martinair which had its fine reduced.

The airlines then took their case back to the General Court, Europe's second-highest.

The Luxembourg-based court rejected Air France KLM and KLM's appeals and those brought by Martinair Holland, Cargolux, Lufthansa LHAG.DE and Singapore Airlines SIAL.SI.

"Air France-KLM has taken note of the EU General Court’s judgement on the appeal filed against the decision of the European Commission of 17 March 2017 against 13 cargo operators, including Group airlines Air France, KLM and Martinair for practices considered to be anti-competitive in the air cargo sector," Air France KLM said in a statement.

"The Group will immediately analyse this decision in view of an appeal before the Court of Justice. Provisions of 350.6 million euros ($391 million) including interest have been made in respect of these fines in the accounts on 31 December 2021," it added.

The Commission had fined Air France €182.9 million, the highest, followed by KLM at €127.1 million. The total fine for the cartel made up of 12 airlines came to €776 million.

The court reduced the fines for Air Canada AC.TO, Japan Airlines 9201.T, British Airways ICAG.L, Cathay Pacific Airways 0293.HK, Latam Airlines Group and its subsidiary Lan Cargo.

SAS's SAS.ST fine remained about the same after judges reduced the penalties for part of its infringements but increased them for others.

Lufthansa LHAG.DE and subsidiary Swiss International Airlines escaped a fine as it alerted the EU competition authority to the cartel.

The cases are T-323/17 Martinair Holland, T-324/17 SAS Cargo Group and others, T-325/17 KLM, T-336/17 Air Canada, T-334/17 Cargolux Airlines, T-337/17 Air FranceKLM, T-338/17 Air France, T-340/17 Japan Airlines, Case T-341/17 British Airways, T-342/17 Deutsche Lufthansa and others, T-343/17 Cathay Pacific Airways, T-344/17 Latam Airlines Group & Lan Cargo and T-350/17 Singapore Airlines & Singapore Airlines Cargo.

The above news followed a Reuters alert that stated, "GENERAL COURT ANNULS PART OF EU CARTEL FINDING AGAINST BRITISH AIRWAYS , JAPAN AIRLINES, AIR CANADA, CATHAY PACIFIC AIRWAYS <0293.HK>".

Air France-KLM Renews CEO Smith's Mandate And Names New KLM Boss

All of the above news was followed by news that Air France-KLM AIR.PA will renew the mandate of CEO Ben Smith for an additional five years, the Franco-Dutch airline group said in a statement on Thursday 31 March.

The group added that Marjan Rintel would replace Pieter Elbers as CEO of its Dutch arm KLM from July 1.

"These two decisions by the Board of Directors stabilise the governance of the group at a key moment in its history," Chairwoman Anne-Marie Couderc said in a statement.

Rintel previously held executive roles in Air France-KLM and is currently head of the NS, Netherland's leading passenger railway operator.

The group's board had decided in January against renewing Elbers' mandate for a third term.

Smith has helmed Air France-KLM since 2018 and through the coronavirus pandemic, during which the company received billions in state aid and announced large-scale job cuts.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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