KLM paid €8 million in annual tax since 2004 on average; Turnover equaled €163 billion
Dutch airline KLM has paid 151 million euros in corporate profit tax on pre-tax profits of 671 million euros over the past 19 years, according to a report by RTL on Thursday. The company recorded revenue of 163 billion euros since it was acquired by Air France in 2004, and has paid an average annual tax of 8 million euros to the Dutch treasury.
The company's financial performance has been particularly challenged in recent years, with losses recorded in seven of the past 19 financial years, especially during the Covid-19 pandemic. For 2020 and 2021, a total loss of 3.2 billion euros before tax was recorded. The analysis by the broadcaster showed that the Dutch airline recorded a profit in 11 of the relevant years, and performed just better than break-even in 2010.
In response to the pandemic, the Dutch government provided support to KLM, granting the airline 1.96 billion euros in wage subsidies through the NOW scheme. This support, which equates to over 70,000 euros per employee, does not have to be repaid by the company, RTL reported. However, KLM still owes over 1 billion euros in back wage tax and has been given 60 months to repay the debt.
During the pandemic, KLM also borrowed 277 million euros from the Dutch State, while the treasury guaranteed bank loans for a total of 655 million euros. These loans have since been repaid in full as the company seeks to regain control of its operations.
The State aid provided to KLM came with specific conditions, including staff cost reductions and a bonus ban. However, KLM has struggled to meet these requirements, failing to achieve the agreed-upon cost reduction by 2023. Additionally, the airline paid out bonuses related to 2019 at the end of 2022, which was not allowed under the State aid conditions.
Last year, Air France-KLM CEO Ben Smith was awarded a 4.3 million euro bonus for his performance in 2021 on top of his 900,000 euro salary, though 25 percent of shareholders voted against the bonus, with many agitated that he would receive such a high bonus when the company's financial results were dismal due to the coronavirus pandemic. The bonus was only allowed to be paid out on the condition that Air France-KLM repaid at least 75 percent of the State aid it received.
To gain greater control over the company's policy, the Dutch State also invested in Air France-KLM shares initially to match the 8% stake held by the French government. However, the value of those shares has dropped by 90% in 2023, amounting to a 650 million euro loss. The Netherlands purchased an additional 220 million worth of shares in 2022, however the ratio is now asymmetric due to increased French investment.
At the start of the year, the Netherlands held 9.3 percent of Air France-KLM, while the French State secured a 28.6-percent stake. CMA CGM now owns 9 percent, China Eastern Airlines holds 4.7 percent, Delta Air Lines owns 2.9 percent, other shareholders combine for 44.25 percent. The company is keeping 0.05 percent of shares in reserve, while its employees collectively own 1.2 percent of the company.