THE HAGUE – The Dutch government yesterday suspended plans to help beleaguered national carrier KLM with a multibillion-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, with KLM saying it will not remain afloat without a massive government infusion to save the world’s oldest airline, now 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 after talks with KLM.
“It’s really important now that everybody take their responsibility and realise that KLM is in an existential crisis.”
The Dutch cabinet’s decision follows a day of intensive talks between KLM and its unions to try and reach an accord over the bailout deal, which Hoekstra said will only go through if the airline adheres to a number of tough cost-cutting measures.
The minister gave KLM and unions representing pilots, cabin and ground crew until 12pm yesterday (1100 GMT) to sign an agreement to unlock the second tranche of the €3.4 billion (RM16.49 billion) injection.
‘Deal is a deal’
While talks are ongoing with several unions, Dutch pilots’ union VNV has refused to sign what it termed a “last minute” change to conditions for the deal.
The bitter feud centres around a clause in the agreement that 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% cut in costs and will see 5,000 jobs being shed as a result of the global impact of the Covid-19 crisis on air travel.
It also includes an agreement from unions to cut pilots’ salaries until March 2022, and ground and cabin crew’s wages 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.
“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.
“A deal is a deal.”
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 commitments at the last minute,” it said in a statement to AFP.
But it added: “As FNV, we will never endanger the future of KLM.”
‘Bottom of the barrel’
Some 3,000 pilots within the airline are said to be the hardest hit by the austerity plan, with salary cuts of up to 20%, said Dutch news reports.
Other unions, however, have signed the deal, including the cabin crew union and aerospace technicians’ union, saying keeping KLM flying is the first priority.
“We’re staring at the bottom of the barrel,” Dutch Union of Aerospace Technicians chairman Robert Swankhuizen told the RTL Nieuws private broadcaster.
“Squabbling any longer jeopardises state aid.”
KLM, in a statement, said the airline is “in its worst crisis in its 101 years of existence”.
“It is all the more regrettable that it has not been possible today to get all the unions to sign the ‘commitment clause’ by the end of October,” said chief executive Pieter Elbers.
“This was the final step required for approval from the cabinet. Without this loan, KLM will not get through this difficult time.
“This makes this impasse extremely worrying.”
Air France-KLM posted a net loss of €1.7 billion for the third quarter, compared with a €363 million profit over the same time last year. – AFP, November 1, 2020
