LONDON – In a surprise revelation, the Dutch Government has announced it has purchased a 12.68% stake in Air France-KLM.

As a result, shares in the airline have fallen 11% amid the news, with the Dutch Government stating that this was in a response to protect “Dutch Interests”.

It is understood that this deal is valued at $774 million, with the French government only being made aware of this an hour before a press conference was held.

According to Dutch Finance Minister Wopke Hoekstra, “Buying this stake ensures we have a seat at the table”.

Hoekstra’s justifications into this was to protect the economic interests and jobs of the Dutch population involved with the airline as well as preserving operations at Amsterdam’s Schiphol Airport which is Europe’s third busiest airport.

French Finance Minister Bruno Le Maire expressing opposition saying that the airline should be “managed without national public interference”.

On top of this, Le Maire revealed that neither the board of the airline or the French state had been consulted about this prior.

“It is essential to respect the principles of good governance and for Air France-KLM to be managed without state interference”, he added.

Before this surprise purchase, the Dutch government only had a 6% stake in KLM, with France owning around 14.3%.

This has happened due to a supposed significant number of agreements which made the Dutch government feel as if it did not have enough influence in its own holding company, KLM.

The level of disagreement has been going on for a significant amount of time with the main topic being about the autonomy process in KLM.

The strikes on the French front has also made the Netherlands want more charge over the group due to the heavy losses that were suffered as a result and also the shakeup in bringing in new CEO Benjamin Smith.

And if the industry thought this was enough disruption, it would be no surprise that the Dutch have taken this action because of reports coming out that the KLM CEO Pieter Elbers could lose his jobs due to his vocal support of keeping the two carriers separate.

It is understood that board meetings are to take place this week to discuss what has been labelled as “fallout” over this surprise purchase.

How this will develop will be very interesting, but it seems like this will emerge into more of a state conflict on top of the internal fighting that still seems to be going on.

How Le Maire and Hoekstra, in particular, will be able to come to a solution over this remains unclear, but it seems like the Dutch government are wanting to reassure its power over this issue.

Even if talks become positive, it is very unlikely that the Dutch government will actually reduce its stake at a risk of having less influence.

The French may have to concede on this, especially with the level of turbulence that has occurred in the country and the airline.

Shares may have fallen in the airline because of the increased government control, which has always seen failure and volatility in the industry with the demises of Alitalia for example.

How the extended control will be used is unclear, but we could see more restructuring over the next few weeks as a result.