Government prepares financial support measures for KLM

The Dutch government plans to provide KLM with financial assistance totalling between two and four billion euros to enable the company to get through this difficult and uncertain time. Owing to travel restrictions, over 90% of the airline's fleet is currently grounded. The precise structure of the support, which is expected to consist of a guarantee and a loan, is currently being worked out.

The government will require KLM to fulfil certain conditions in return for the financial support. This would mean KLM paying no dividends and awarding no bonuses for the duration of the assistance. The government will also ask staff to take a pay cut, with the highest earners making the largest contribution. KLM will also have to make a contribution in terms of sustainability and nuisance reduction, for example by cutting back the number of night flights.

In addition, the government expects parent company Air France-KLM and its two subsidiaries KLM and Air France to take measures, to be set out in a restructuring plan, to ensure that they will be able to continue playing a significant role in what is a highly competitive international aviation market.

Minister of Finance Wopke Hoekstra and Minister of Infrastructure and Water Management Cora van Nieuwenhuizen sent a letter on 24 April to the House of Representatives concerning the government's intention to provide financial support to KLM. The French state has also announced its financial assistance for Air France. There has been intensive contact in recent weeks between the Dutch and French governments, and with Air France-KLM and KLM, about what financial support the company needs. At the same time the Dutch state has been in talks with the European Commission to obtain the necessary approval for the support measures.

Mr Hoekstra says that now is the time to provide KLM with this assistance.

‘We’ve always said we will do everything it takes to help Air France-KLM through this crisis. Schiphol airport and its main user KLM are vital to the Dutch economy and employment.’

‘A strong KLM is indispensable for the major transport hub that is Schiphol. Over 100,000 jobs depend directly and indirectly on the airport. The extensive network of European and intercontinental destinations served by our national carrier is essential in this regard. This support for KLM ensures that Schiphol retains its important position and the Netherlands remains connected and accessible.’

This is why last year the Dutch government acquired 14% of the shares in Air France-KLM. The purchase enabled the government to better safeguard the public interest, given the importance of KLM and Schiphol to the Netherlands. The support the government is now providing will make a key contribution to fulfilling this objective.

Over the coming period the precise form of the assistance will be worked out and the conditions will be agreed in consultation with KLM. Mr Hoekstra commented that, while the company would have to make sacrifices, this was justifiable and reasonable. ‘I realise that today's message is not easy for KLM. But we are talking about taxpayers’ money, our money, which is now needed to strengthen KLM’s financial position.’