Netherlands puts KLM bailout on hold after pilots reject wage freeze
Reuters
Published Oct 31, 2020 12:23
Updated Oct 31, 2020 20:25
THE HAGUE (Reuters) - The Dutch government on Saturday put on hold its plan to bail out KLM, the Dutch arm of Air France (PA:AIRF)-KLM, after pilots rejected a wage-freeze until 2025, Finance Minister Wopke Hoekstra said.
KLM had been due to receive a 3.4 billion euro ($4.0 billion) package, including 1 billion euros in direct loans. from the government to help it cope with the damage from the coronavirus pandemic.
"I find it very disappointing, but this way we cannot move forward with the loan now," Hoekstra told journalists.
The pilots' union argued that it had already agreed to a freeze until March 2022, and could not now change that agreement at the last minute.
Ahead of the government announcement, KLM CEO Pieter Elbers had said that "without this loan, KLM will not make it through these challenging times".
In a statement, he said KLM would not immediately go bankrupt but that its reserves "cannot last more than a few months".
In a letter to parliament, Hoekstra left the door open for the bailout if all KLM employees agreed to the five-year wage freeze.
"It is up to KLM and the unions to ensure that they meet the government's demands after all," he said, adding that the second wave of the coronavirus pandemic had changed expectations about how soon airlines could bounce back.
"The outlook is sombre, that makes it all the more important to have a good restructuring programme in place to work towards KLM's long-term recovery," he wrote.
Unions representing ground and cabin crews have agreed to the extended wage freeze, which is set to last as long as the airline receives government support.
Air France-KLM on Friday reported a 67% drop in third-quarter revenue to 2.52 billion euros, just as a new COVID-19 surge poses further threats to an industry devastated by the pandemic and the ensuing collapse in long-haul travel. The airline's net debt rose by 3 billion euros to 9 billion euros. ($1 = 0.8586 euros)
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Written By: Reuters
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