Dutch govt backs KLM bailout after pilots agree to pay cut

After KLM announces that the pilots’ union had backed down, the govt says it is now ready to sign off on the RM17b state aid injection

by AFP / pic by BLOOMBERG

THE HAGUE • The Dutch government on Tuesday approved a multibillion-euro coronavirus bailout for struggling airline KLM after pilots agreed a five-year pay cut deal.

Finance Minister Wopke Hoekstra on Saturday dramatically suspended plans to rescue the beleaguered Dutch arm of Air France-KLM SA after unions refused to budge.

But after KLM announced that the pilots’ union had backed down, the government said it was now ready to sign off on the €3.4 billion (RM17 billion) state aid injection.

“Intensive consultations” between KLM and the unions led to a “positive outcome”, Hoekstra and Infrastructure Minister Cora van Nieuwenhuizen said in a letter to Parliament.

“The Cabinet can therefore agree to its restructuring plan and has since confirmed this to the KLM management board,” they wrote.

KLM CEO Pieter Elbers had earlier announced the deal with the pilots’ union, hailing it as an “important step” for the airline’s survival.

“The past few days have been incredibly intensive for everyone, with great pressure on the company, negative impact on reputation and internal divisions,” he said.

“But in the end, we, as KLM and unions, came to an agreement.” The suspension of the rescue plan had put the future of the world’s oldest airline at risk as it struggles to deal with the impact of the Covid-19 pandemic.

In the spring, Paris gave Air France €7 billion in loans, and The Hague also granted KLM state aid.

But arguments over the restructuring plan for KLM meant that the government kept back most of the money.

Talks between KLM and unions representing pilots, cabin and ground crew then failed to reach a deadline set by Hoekstra on Saturday.

The Dutch pilots union VNV had refused to sign what they termed a “last minute” change to conditions to the deal.

The bitter feud centres around a clause in the agreement that asks the airline’s staff to take salary cuts for the next five years.

KLM presented the Finance Ministry with an austerity plan that requires a 15% cut in costs and would see 5,000 jobs shed, as a result of a global slump in air travel owing to the pandemic.

It included an agreement from unions to cut pilots’ salaries until March 2022 and ground and cabin crew salaries until the start of 2023.

But last Friday, Hoekstra rejected the plan, insisting that salary cuts run concurrently with the government’s five-year bailout package.

KLM chief Elbers admitted that the Covid-19 pandemic meant the airline was “asking a lot from all colleagues”.

“This unprecedented time requires unprecedented and unusual steps,” he said.

Air France-KLM posted a net loss of €1.7 billion for the third quarter, compared to a €363 million profit over the same time last year. — AFP