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EC OKs Dutch aid package for KLM, 3.4 billion to be injected in the company


The European Commission approves the Dutch government’s aid package to airline KLM worth EUR 3.4 billion. In June, it was announced that the Cabinet would come to the rescue of KLM to weather the corona crisis.

The aid consists of a direct loan of 1 billion euros with a term of 5.5 years, and government guarantees of up to 90 percent on loans from a total of eleven banks worth 2.4 billion euros.

European Commissioner Margrethe Vestager (competition) says that KLM plays a very important role for the Dutch economy in terms of employment and air connections.

“The crisis has hit the airline industry extremely hard. This support package will provide KLM with the liquidity it needs urgently to withstand the impact of the corona crisis.”

Air France previously received 7 billion support from the French government. This brings the total amount of state aid for Air France-KLM to EUR 10.4 billion.

There are, however, conditions attached to the aid. For example, KLM must structurally reduce costs by 15 percent, with job losses seem inevitable. Employees who earn more than three times as an average must give up 20 percent of their wages.

Unions at KLM previously objected to the conditions and requirements for participation in the reorganization plans. They are not involved in the plans, while according to international rules that belong to collective agreements, they should. KLM would also like to postpone a previously agreed wage increase of 2.5 percent, which would be implemented from 1 August, until further notice. The unions see nothing in this, also because there is still no insight into the total package of measures to reduce costs.

KLM was a major consumer of the aid measure in the first round of government wage subsidies. In total, the government paid the airline and various maintenance and catering parts of the company more than 304 million euros to partly cover the labour costs.

Written by: Patrick O'Brien

Patrick O'Brien is a student who is taking only the first steps in journalism. The main interest is events from the world of macroeconomics and finance.

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