France was taken by surprise as the Dutch government announced that it had purchased a 14 percent stake in Air France-KLM -- in an attempt to counter French influence.
The airline’s shares fell sharply following the announcement.
The move surprised analysts and comes in the midst of tensions over the company's strategic direction.
Financial observers also said the tug of war risks harming the company and its investors.
The stealth move came weeks after a confrontation between the Dutch government and the company's French-dominated executive board over waning Dutch influence.
France reacted angrily to what Finance Minister Bruno Le Maire described as an "incomprehensible" intervention by the Netherlands.
New CEO Ben Smith travelled to the Netherlands for an uncomfortable meeting with Finance Minister Wopke Hoekstra before an Air France board meeting on Feb 19.
Sources close to KLM said Smith's dismissive attitude toward Dutch government concerns about the role of Amsterdam's Schiphol Airport likely prompted the government's decision to act.
Hoekstra said buying the stake was a "fundamental step toward protecting Dutch interests", at a news conference called at short notice on Tuesday night in the Hague.
Le Maire will meet Hoekstra to discuss the standoff later this week, officials said, with one likening the Dutch behaviour to that of a "corporate raider".
The group has trailed rivals Lufthansa and British Airways on profitability, held back by restrictive French union deals and strikes that last year wiped 335 million euros off earnings and forced out its former CEO.