Dutch gov’t pulls €3.4 billion KLM state aid package after unions reject deal
The Dutch government has for the time being withdrawn its offer of a multi-billion euro bailout to KLM after the airline was unable to secure a commitment from all of its labor unions to accept a pay cut for up to five years. The agreement was a condition for the airline to receive a 3.4 billion euro package of subsidized government-backed loans.
“It's disappointing and risky, and I would have liked to have said that we could just continue, but that is not the case now,” Finance Minister Wokpe Hoekstra said. “It is up to KLM and the unions to ensure that the conditions set are still met. If the conditions are still met at a later time, the Cabinet will further inform your House,” he wrote in a letter to Khadija Arib, the Chair of the Tweede Kamer, the lower house of Dutch Parliament.
The state aid was meant to help the airline overcome the financial troubles caused by the global coronavirus pandemic. The airline said it planned to cut 5,000 jobs after its worst half-year performance ever, and then said it was likely to slash more positions after posting a 234 million euro loss in the third quarter.
“It is all the more regrettable that it has not been possible today to get all the unions to sign the 'commitment clause' by the end of October. This was the final step required for approval from the Cabinet. Without this loan, KLM will not get through this difficult time,” said Pieter Elbers, KLM CEO, in a statement released earlier on Saturday.
The Cabinet has already given a great deal of support to KLM, Hoekstra said on Friday. "So that something is being asked for in return, because the taxpayer is contributing to this, I think is reasonable.”
Five unions representing airline staffers approved the austere deal, but the VNV union representing the airline’s pilots refused to sign an agreement accepting the precondition. Earlier on Saturday, the VNV said it had a responsibility to the airline, and would not be the reason for the airline to cease operations. FNV unions had not yet agreed to sign by the noon Saturday deadline.
FNV, which represents many cabin crew members and ground crew workers, said it already agreed to a 2.5-year wage cut. “If after 2022 there is a need to further reduce costs for longer, we will, as always, be constructive again,” said union leader Joost van Doesburg.
“I realise that we have asked a lot from all parties with the aim of KLM surviving this COVID-19 pandemic; abandoning normal negotiations and procedures and, under great time pressure in this time of crisis, agreeing to hand in working conditions for a longer period of time than the current collective labour agreements,” Elbers said. “At FNV, we await the internal deliberations. For the time being, I can only call once again on the pilots' union VNV to take this final step and to fulfil its commitment by signing this clause.”
The airline is owned by parent company Air France - KLM, of which the Dutch government holds a 14 percent stake. The remaining ownership of Air France - KLM include the French State, which has 14.3 percent, Delta (8.8%), China Eastern Airlines (8.8%), Causeway Capital (6.9%) Donald Smith & Co. (5.2%) and the company’s employees (3.7%), with the rest owned by other shareholders.
