UPDATE: European Commission approves €3.4 billion KLM support package

The European Commission has today announced that it has approved the Dutch government’s €3.4 billion financial support package for KLM, which was agreed between the airline and the Dutch government last month.

A KLM Boeing 737 NG, registered PH-BXZ. Photo by Karam Sodhi | AeroNewsX

Back in June, AeroNewsX reported that the Dutch government and KLM had finalised a financial support package which consisted of “a guarantee bank loan of up to 2.4 billion euros and a direct loan from the state of up to 1 billion euros.” The financial aid package consisted of a number of conditions including reducing night-time flights and CO2 emissions by 50 per cent. The Dutch airline will also commit to not paying dividends to shareholders or staff bonuses for the lifetime of the financial aid which is expected to run “until the end of 2025.” KLM Chief Executive Pieter Elbers commented on the finalised agreement in June by stating that “the financing package is necessary to secure the long and difficult road of recovery in the coming period.” The financial aid package was then sent to the European Commission for approval.

There were doubts that the financial package may be delayed or not approved at all. As AeroNewsX reported last Friday, a number of trade unions including the largest cabin crew association in the Netherlands, VNC, lodged an objection against the financial aid package. In their letter, the trade unions felt aggrieved about the new “mandatory conditions of employment.” The letter which was sent to the European Commission also highlighted a potential issue that trade unions were not involved in the negotiations between the Dutch state and the airline “despite repeated requests.” However, in their letter, the trade unions also recognized that this was a “particularly difficult situation” and that all the trade unions were willing “to contribute to the recovery” of the oldest airline in the world.

In a press release seen by AeroNewsX, the European Commission said that the financial aid package was in-line with “EU State aid rules” and both the state-guaranteed loan of 2.4 billion euros provided by a consortium of banks and the direct loan of 1 billion euros from the Dutch state will “provide urgent liquidity to the company in the context of the coronavirus outbreak.” The Dutch carrier has “over 36,600 employees” and “is the Netherlands' second-largest private employer.” The European Commission said that “KLM is also a very important company for the Dutch economy, as it ensures the connectivity of the Netherlands with many destinations in Europe, with the Dutch regions overseas and the rest of the world.” The flag carrier for the Netherlands was also commended by the European Commission for their “essential role in the repatriation of citizens and for the transport of medical equipment.”

Executive Vice-President of the European Commission Margrethe Vestager, who is in charge of European competition policy, said “KLM plays a key role for the Dutch economy in terms of employment and air connectivity. The crisis has hit the aviation sector particularly hard. This €3.4 billion State guarantee and State loan will provide KLM with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak.”

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