Dutch minister throws carrier KLM 3.4 billion euro lifeline
- 26 Jun 2020
The Dutch government announced Friday that it will throw national carrier KLM a 3.4 billion-euro ($3.81 billion) lifeline to help the airline survive the aviation slump caused by the coronavirus pandemic.
Finance Minister Wopke Hoekstra said the support package is made up of a 1 billion-euro loan and 2.4 billion euros in guarantees for bank loans.
There are strings attached to the bailout, with the government setting conditions including that KLM must cut costs by 15%, improve the airline's sustainability and reduce the number of night flights it carries out at the national airport, Schiphol, on the outskirts of Amsterdam.
Hoekstra said that the cost-cutting order means that job losses at the carrier that employs some 30,000 people are "likely unavoidable.”
KLM CEO Pieter Elbers said the package was necessary to help KLM recover from the crisis that has kept some 90% of its planes on the ground during the global pandemic. Airlines around the world are forecast to lose $84 billion this year, with revenue halved.
READ MORE
Volkswagen to explore acquisition
World stocks sink due to surge in virus cases and IMF warning
"This is a very important step and I express my gratitude on behalf of all KLM colleagues to the Dutch state and the banks for their confidence in our organization and our future,” he said in a statement.
The deal includes appointing a "state agent” to oversee how the package is spent and ensure KLM sticks to the conditions.
KLM is in a partnership with French carrier Air France. The French government has pledged 7 billion euros in loans and loan guarantees to the carrier.
The Dutch announcement came a day after shareholders of German carrier Lufthansa approved a 9 billion-euro ($11 billion) rescue package that will see the German government take a 20% stake, after management told them the airline was running out of money and faced years of reduced demand for air travel.
The Dutch government said that the package must be approved by the European Commission. "We hope and expect that will happen in coming days,” Hoekstra said.
Associated Press