The Dutch government puts the KLM loan on standby
The Dutch government has put KLM's rescue plan on hold, the Dutch wing of Air France AIRF.PA-KLM. This consequence came as a result of the pilots' decision to reject the wage freeze by 2025.
KLM was to receive a € 3,4 billion package, including € 1 billion in direct government loans. Monday in a row, the airline she had to keep almost her entire fleet ashore due to the pandemic and cancel thousands of flights.
To overcome the COVID-19 pandemic, KLM needs financial help guaranteed by the Dutch government. Discussions were held with the unions and many of them accepted the conditions imposed, except the pilots' union, which had already agreed to a wage freeze by March 2022. This agreement does not satisfy those in the Government who calls for a freeze on the salaries of all KLM employees by March 2025.
The Dutch government has put KLM's rescue plan on hold
Prior to the government's announcement, KLM CEO Pieter Elbers said that "Without this loan, KLM will not be able to get through these difficult times. KLM will not go bankrupt immediately, only that its reserves "cannot last more than a few months".
Dutch Finance Minister Wopke Hoekstra has announced that the loan can still be allocated, as long as KLM agrees to a long-term wage freeze.
The unions representing the ground and cabin crews agreed to the prolonged wage freeze. In this regard, they signed the airline's "commitment clause" with the Dutch Ministry of Finance.
Air France-KLM reported a 67% drop in revenue in the third quarter to 2,34 billion euros, compared to the same period last year when it recorded revenues of 7.45 billion euros. The airline's net debt increased by 3 billion euros to 9 billion.
By the end of the year, KLM will lay off 15% of its staff. This percentage amounts to about 5000 employees. Also, with the second wave of the pandemic, the number of layoffs is likely to increase.