Home World Europe will support AF-KLM with billion infusions

Europe will support AF-KLM with billion infusions

The Dutch government is working on emergency support for KLM of between 2 and 4 billion euros. It concerns guarantees and loans, but the exact form and size are still being worked out. The airline has been badly hit by the corona crisis and has already called on state aid.

Ministers Cora van Nieuwenhuizen (Infrastructure) and Wopke Hoekstra (Finance) announced this on Friday evening.

KLM has been severely affected by the travel restrictions due to the corona virus. More than 90 percent of the aircraft are grounded while costs continue. “The cabinet has always said that it will do everything it can to help KLM through this crisis,” Hoekstra said in an explanation.

A few hours earlier, the French government announced a total of EUR 7 billion for Air France. Both companies belong to the French-Dutch group Air France – KLM. In total, this concerns an aid package of approximately EUR 10 billion.

With these steps Air France – KLM can “really broadcast it in the coming years”, Hoekstra thinks.

In addition to discussions with the airlines, the Cabinet is also in contact with the French government and the European Commission. Brussels must ultimately give permission if there is state aid.
KLM of ‘vital importance’ for the Dutch economy

The minister pointed out the “vital importance” of KLM in combination with Schiphol for the Dutch economy and employment. Together, the organizations provide about 114,000 jobs.

“You can see it as the first domino at the start of a long line. If KLM falls over, it will not only have consequences for the company and the staff, but for all the stones that will come afterwards,” Hoekstra explained.

According to him, this applies not only to Schiphol, but also to the business climate, tourism and other sectors that benefit from a good international connection. “By preventing KLM from falling over, we prevent a whole series of building blocks of our economy and our society from running into major problems,” said Hoekstra.

“We cannot justify losing such an essential link in our infrastructure,” added Van Nieuwenhuizen.

Conditions are set for the billions in support. That means no dividend distribution to shareholders, no bonuses and no profit sharing for staff. Requirements are also set for profit appropriation, working conditions and sustainability.

Hoekstra: “If you give so much support, you can expect something in return.” The following applies: the strongest shoulders carry the heaviest loads. This means that management and pilots in particular will have to hand in salaries and that, for example, ground personnel will be spared as much as possible. “It is evident that the Dutch part must do something about the costs,” said Hoekstra.

Van Nieuwenhuizen sets “sustainability and nuisance limitation” as conditions. In concrete terms, the minister is thinking of fewer night flights and a reduction in CO2 emissions, but this also needs to be further elaborated.

The support had been in the air for a while. Last week, the House of Representatives was secretly briefed by Hoekstra on KLM’s situation. The parties already announced a few weeks ago that there must be conditions for state aid.

Ben Smith, the CEO of Air France – KLM, initially had the condition that his bonus depended on the support that the airline group would receive. That led to a lot of criticism, among others from Hoekstra. Smith eventually waived the bonus and turned in 25 percent of his salary.

The Dutch government is already a small 6 percent shareholder in KLM and 14 years ago in the Air France – KLM group.

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