KLM to get €3.4 billion coronavirus support package; 20% of Schiphol night flights cut
Update 9:10 a.m. - Ministers Hoekstra and Van Nieuwenhuizen confirmed the amount of aid promised to KLM. Article updated to add details about the aid package below
Airline KLM will receive a support package of 3.4 billion euros to get through the coronavirus crisis, the Dutch government agreed with the French government, sources told Reuters. In exchange for the state aid, the Netherlands will appoint a supervisor on the KLM board. According to Reuters' sources, this is to ensure that the Dutch aid package only goes to KLM, and not Air France-KLM.
At 8:00 a.m. this morning, Ministers Wopke Hoekstra of Finance and Cora van Nieuwenhuizen of Infrastructure will give more details about the aid package in a press conference held at the Ministry of Finance.
The government already announced in April that KLM will get between 2 and 4 billion euros in support in the form of guarantees and loans, shortly after the French government announced state aid of 7 billion euros for Air France. The airlines suffered major blows due to the coronavirus crisis, which still has a large part of their fleets grounded.
According to NOS, KLM already claimed from the government's support measure to help affected companies pay their wages, but needs more to survive this crisis.
The aid consists of two parts: a direct loan of 1 billion euros and a loan of 2.4 billion euros KLM will receive directly from 11 banks. The government guarantees the second loan.
In exchange for the state aid, KLM must cut staff salaries, NU.nl reports. Employees who earn more than three times the average income have been asked to accept a pay cut of at least 20 percent. Employees who earn less will get lower pay cuts. As long as KLM receives state aid, the company cannot pay dividends to shareholders or bonuses. The airline will also have to cut its workforce in order to cut costs by 15 percent.
"It is a positive message for the company, but a difficult message for the staff," Hoekstra said about these conditions. "We must not only guide KLM through the crisis, but also let it emerge stronger from the crisis."
The airline also promised to reduce its night flights from Schiphol by 20 percent, from 32 thousand to 25 thousand per year. According to the airline, this will both reduce nuisance for locals living around the airport and meet the government's environmental requirements.
KLM CEO Pieter Elbers called this aid package necessary for the airline's "long and difficult road of recovery" out of this "unprecedented crisis", in a statement released on KLM's website. "This is a very important step and I express my gratitude on behalf of all KLM colleagues to the Dutch state and the banks for their confidence in our organization and our future," he said.
"With the financing package, KLM can continue to fulfill its important social role in economic recovery and sustainability. In the coming period, we will be working on the restoration of the route network and, on the other hand, on the development of the restructuring plan and the far-reaching conditions that have been imposed on the package."