Netherlands puts KLM bailout on hold after pilots reject wage freeze



FILE PHOTO: A KLM Boeing 737-800 plane lands at Tegel airport in Berlin, Germany, November 2, 2017. REUTERS/Axel Schmidt

October 31, 2020

THE HAGUE (Reuters) – The Dutch government on Saturday put on hold its plan to bail out KLM, the Dutch arm of Air France<AIRF.PA>-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.

(Reporting by Stephanie van den Berg; Editing by Kevin Liffey)





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KLM 3.4bn Bailout Hits Crisis As Unions Refuse Paycut Plan


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.





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
 ANP / Koen van Weel

“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.





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Dutch government puts KLM bailout plan on hold after pilots reject wage freeze


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THE HAGUE — The Dutch government said on Saturday it will put on hold its bailout plan to KLM, the Dutch arm of Air France-KLM, after the airline’s pilots rejected a demand that their wages be frozen until 2025, Dutch finance minister Wopke Hoekstra said.

KLM had been slated to receive a 3.4 billion euro ($3.96 billion) package, including 1 billion euros in direct loans from the Dutch government to help it through the coronavirus pandemic.

“I find it very disappointing but this way we cannot move forward with the loan now,” Dutch finance minister Wopke Hoestra told journalists.

He spoke shortly after the pilots’ union refused to accept a wage freeze until 2025, arguing it had already agreed to a freeze lasting until March 2022, and that changing the agreement at short notice was not feasible.

Ahead of the government announcement, KLM CEO Pieter Elbers stressed how much the company needed the money.

“Without this loan KLM will not make it through these challenging times,” Elbers said in a statement.

Hoekstra said KLM would not immediately go bankrupt but did not have much in the way of reserves.

“They cannot last more than a few months,” he said.

Other 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.

The Dutch government warned on Friday it would withhold the bailout package unless the company adjusted its restructuring plan to include the wage freezes.

Air France-KLM on Friday reported a 67% drop in third-quarter revenue to 2.52 billion euros, underlining the airline’s difficult financial condition as a new COVID-19 surge poses further threats to an industry crippled by the epidemic and a collapse in long-haul travel. ($1 = 0.8586 euros) (Reporting by Stephanie van den Berg Editing by John Stonestreet and James Drummond)



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