Europe approves €3.4 billion KLM bailout

The Dutch government's 3.4-billion euro bailout package for airline KLM was approved by the European Commission on Monday. The money was urgently needed by the airline to maintain liquidity, with the Commission agreeing that the airline plays a critical role in the Dutch economy.

That KLM was in good financial standing at the turn of the new year meant it was easier for the airline to receive the bailout and not violate temporary EU rules limiting State aid. Loan repayment periods of under six years were within European limits, and the political body was pleased with cuts to senior management salaries and dividend bans.

The bailout includes a loan of one billion euros directly from the Netherlands, and 2.4 billion euros in bank loans that have the backing of the Dutch State. "KLM plays a key role for the Dutch economy in terms of employment and air connectivity. The crisis has hit the aviation sector particularly hard," said Margrethe Vestager, the Commission's Executive Vice-President in charge of competition policy.

"The Netherlands imposed certain conditions on the aid measure with respect to profit allocation, working conditions and sustainability. Very good. Member States are free to design measures in line with their policy objectives and EU rules,” she continued.

The European Commission noted that KLM is the second-largest private employer in the Netherlands. With nearly 37 thousand employees, the company is responsible for keeping the Netherlands connected to its overseas interests, and destinations in Europe and around the world. "Since the start of the coronavirus outbreak, KLM has also played an essential role in the repatriation of citizens and for the transport of medical equipment," the European Commission said in a statement.