The Dutch government has announced an aid package of 3,4 billion euros is to be made available to help KLM survive the coronavirus crisis - as long as the airline company fulfils certain conditions. 

Financial aid for KLM

The aid package consists of a guarantee for bank loans of up to 2,4 billion euros and a direct loan from the state of up to 1 billion euros. The bank loans will be covered by 11 international and Dutch banks, while the state loan will run until the end of 2025 and will be paid in instalments - as long as KLM meets certain obligations and the Dutch government is satisfied with the progress made. 

Finance Minister Wopke Hoekstra and Minister of Infrastructure and Water Management Cora van Nieuwenhuizen said the financial support was offered because of KLM's importance to the international network at Schiphol airport, the Dutch economy, and employment opportunities in the Netherlands.

The decision was made in collaboration with the French government, who will offer support to Air France. The support package has been formally submitted to the European Commission for approval.

The government’s conditions

In return for the financial support, KLM has to reduce costs by 15 percent, cut the number of night flights out of Schiphol, and make an active contribution to sustainability. 

Employees who earn more than three times the national average will also have to take a pay cut of at least 20 percent, while employees on lower salaries will suffer smaller cuts. As long as KLM receives state aid, no bonuses will be paid to employees, and no dividends will be paid to shareholders.

KLM has also agreed to reduce night flights by 20 percent, from 32.000 a year to 25.000. This is after they rejected a proposal for fewer flights at night, to cut noise pollution for local residents, in the autumn of 2018. The airline has also pledged to reduce CO2 emissions by 50 percent per passenger by 2030 compared to 2005.

To ensure these commitments are followed through, and to guarantee that the money provided is only used to support KLM, and not Air France, a supervisor will be instated on the KLM board. The government feels it is necessary for both Air France and KLM to take measures to reduce costs by restructuring and reorganising. 

On the airline’s website, president and CEO of KLM Pieter Elbers thanked the government for their support during this unprecedented crisis.