The Dutch government on Saturday suspended plans to help beleaguered national carrier KLM with a multi-billion-euro bailout package after unions declined to sign a deal involving a five-year pay-cut plan.
The move puts the future of the Dutch arm of Air France-KLM into jeopardy, which said it would not remain afloat without a massive government injection to save KLM, the world’s oldest airline hit hard by the coronavirus pandemic.
“The planned state aid is not going through. It’s disappointing but that’s the case,” Finance Minister Wopke Hoekstra told reporters in The Hague.
“It’s really important now that everybody take their responsibility and realise that KLM is in an existential crisis,” the minister said after talks with KLM.
The Dutch cabinet’s decision follows a day of intensive talks between KLM and its unions to try and reach agreement over the deal.
Hoekstra gave KLM and unions representing pilots, cabin and ground crew until 12:00 pm (1100 GMT) on Saturday to sign the agreement to unlock the 3.4 billion euro injection.
While talks are still ongoing with several unions, the Dutch pilots’ union VNV have refused to sign what they termed a “last minute” change to conditions for the deal.
The bitter feud centres around a clause in the agreement which asks the troubled airline’s staff to take salary cuts for the next five years.
KLM this week presented the Finance Ministry with the austerity plan, which demands a 15 percent cut in costs and will see 5,000 jobs being shed as a result of the global impact of the coronavirus pandemic on air travel.
It also included an agreement from unions to cut pilots’ salaries until March 2022 and ground and cabin crew salaries until the start of 2023.
But Hoekstra on Friday turned down the plan, insisting on salary cuts to run concurrently with the government’s five-year bailout package.
“We have not signed,” a VNV representative told AFP shortly after the deadline passed.
“We had an agreement in place with KLM on October 1 and now they (the government) are going back on it,” said the representative, who declined to be named.
“A deal is a deal,” he said.
Talks are also ongoing with umbrella union FNV which accused the government of “creating great uncertainty with changes at the 11th-hour”.
“We do not understand why KLM and the cabinet require extra commitment at the last minute,” FNV said in a statement to AFP.
But it added: “As FNV we will never endanger the future of KLM.”
Some 3,000 pilots within the airline are said be the hardest hit by the austerity plan, with salary cuts of up to 20 percent, Dutch news reports said.
Other unions, however, have signed the deal including cabin crew union and the aerospace technicians’ union, saying keeping KLM flying was the first priority.
“We’re staring at the bottom of the barrel,” Dutch Union of Aerospace Technicians (NVLT) chairman Robert Swankhuizen told the RTL Nieuws private broadcaster.
“Squabbling any longer jeopardises state aid,” he said.
Air France-KLM posted a net loss of 1.7 billion euros ($1.9 billion) for the third quarter, compared with a 363 million euros profit year-on-year.
Mortgage lender Australian Finance Group has posted an underlying profit of $36.3 million for the full financial year on the back of rising residential settlements.
MUMBAI — Reliance Retail Ventures, an arm of billionaire Mukesh Ambani-run Reliance Industries, announced on Saturday that it plans to buy Indian retail pioneer Future Group’s units for 247.13 billion rupees ($3.37 billion).
Reliance Retail Ventures will acquire the retail and wholesale business as well as logistics and warehousing operations of Future Group. Following the acquisition, the retail and wholesale businesses will be merged with Reliance Retail and Fashion Lifestyle, a wholly owned subsidiary of Reliance Retail Ventures while, logistics and warehousing would merge with the buyer.
The announcement marks an end to months of speculation over a stake sale in Future Group, India’s storied but debt-laden retail and consumer goods conglomerate founded by billionaire CEO Kishore Biyani. The move also signals oil-to-telecoms conglomerate Reliance Industries’ intent to focus more on its retail business.
Reliance Retail Ventures said in a statement that the operations of Future Group makes for a strong strategic fit into Reliance’s retail business. Future Group, which originated as a stonewashed-fabric seller in the 1980s, has long been a leader in the development of India’s modern retail industry. It now serves millions of customers through over 1,500 stores in more than 400 cities.
Reliance Industries, on the other hand, is heading for an aggressive fight not only in the online space but e-commerce as well, where it will square off against Amazon India.
“We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small merchants and kiranas as well as large consumer brands,” said Isha Ambani, director at Reliance Retail Ventures, referring to India’s mom-and-pop stores. “We are committed to continue providing value to our consumers across the country.”
Sources had told the Nikkei Asian Review that Future Group was also in talks with Amazon India, as well as private equity companies Premji Invest and Samara Capital.
Premji Invest and Amazon already own stakes in Future Retail, a core business unit of the group. In August, Amazon bought a 49% stake in Future Coupons, one of the shareholders in Future Retail, for 15 billion rupees ($197 million). Through the stake in Future Coupons, Amazon managed to pick up shares in Future Retail and access to country’s 1.3 billion consumers.
The current sale may see Biyani’s stake substantially reduced in some of the companies, mainly Future Retail, a source said. If this happens, the influence of Biyani — an industry pioneer once called “the king of modern retail” — will recede.
In recent years, the retail group has been battling competition from up and coming players such as the Aditya Birla Group, Reliance Retail and V-Mart on the brick-and-mortar retail side. On the other side, are e-commerce players such as Walmart-owned Flipkart and Amazon India.
Future Group’s attempts to establish a multichannel presence have not really worked out after Biyani previously dismissed e-commerce companies as serious threats.