Dutch Fin Min: Further KLM bailout not urgently needed
Dutch flag carrier airline KLM will eventually need help with liquidity, but that assistance does not need to be provided immediately, said Wopke Hoekstra in a letter to Parliament. The caretaker Minister of Finance made the statement as parent company Air France - KLM announced that the company and the French State reached a four-billion euro deal that will double France's ownership stake in the company to 29.9 percent.
The deal was approved by the European Commission. Air France had to give up 18 landing and take-off slots at Orly Airport in Paris, thought the European Commission had initially demanded 24. KLM would likely have to do the same at Schiphol for Brussels to approve any further support from the Dutch State.
Negotiations between the Netherlands, the parent company, the Dutch airline and the European Commission were ongoing, with a goal of determining "the conditions under which a KLM recapitalization could take place and a potential intervention of the Dutch State in such recapitalization," Hoekstra wrote in a joint statement with members of the Dutch and French government.
In a separate letter just from Hoekstra and Dutch Infrastructure Minister Cora van Nieuwenhuizen, they wrote, "Based on current expectations within the sector, KLM has indicated that a capital need will arise, which means that in the short term, there is no acute need to strengthen equity capital." He added that the current Cabinet will continue to support KLM, and will analyze the scenario to find the most optimal solution.
"Due to the uncertain outlook for the recovery of the aviation sector and the lack of an urgent necessity at KLM, the government wants to use the coming period to gain a better picture of this. The cabinet will therefore make a final decision at a later stage on any capital support."
For the time being, the Netherlands owns 14 percent of Air France - KLM, though its ownership stake will be diluted to 9.3 percent as the French State's stake is increased in the billion-euro share issue. The other three billion euros in the deal is the conversion of loan issued during the group's disastrous 2020 at the height of the coronavirus pandemic.
"This change in shareholder relationships has no consequences for the safeguarding of public interests," The Dutch ministers wrote. They said both the Dutch and French States remain dedicated to the success of the individual airlines. "Both states are committed to a successful future for KLM and Air France within AFKL."
"After the support in 2020 from the French State to Air France and the Dutch State to KLM, this further strengthens the financial basis of the Group," KLM wrote in a statement. "For the Netherlands, the connection with the rest of the world via Schiphol is of strategic importance."
The Netherlands has already provided KLM with a loan of a billion euros, and 2.4 billion euros in credit facility guarantees with strict conditions. KLM must repay the loans within five and a half years.