Negotiations on further state aid to Air France-KLM stalling: report

Negotiations between the Dutch and French governments on further state aid for Air France-KLM are going extremely slowly, largely due to the Dutch government's insistence that it will only invest in KLM, Financieele Dagblad reported based on information from insiders.

Two deadlines have already been missed and it seems increasingly likely that there will be no agreement by the presentation of the airline-combination's annual figures on February 18, according to the newspaper.

Despite previous state aid packages of 3.4 billion euros to KLM from the Netherlands and 7 billion euros to Air France from France, the airlines are still struggling under the travel restrictions brought on by the coronavirus pandemic. While the airlines aren't in acute trouble, they want a new capital injection to become more financially resilient.

According to FD, the two airlines feel condemned to continue together, because both Air France and KLM will be worse off on their own. The Netherlands and France also both want to strengthen their position in the company. But the problem is that, as with the previous state aid, the Dutch government only wants to invest in KLM, worrying that money put into the Paris-based holding company will disappear into Air France. This to the annoyance of France, which maintains that an investment in the Air France-KLM group will also be in KLM's best interest.

This brought negotiations to a near halt. According to FD, the Dutch negotiators have little choice but to stick to the KLM-only line. Because in April last year, Minister Wopke Hoekstra of Finance promised that the Dutch taxpayer's money will only go to KLM.