31 October, 2020

KLM's survival in doubt after Dutch government puts a halt on bailout cash

KLM Royal Dutch Airlines is on the very brink of survival after the Dutch government has promised to halt remaining payments to the airline following the firms pilots refusal to accept pay freezes.

The airline is currently facing the worst crisis of its 101-year history and had requested its well-paid pilots to take a pay freeze until mid-2025. The pilots have refused to accept those terms leading the government to pull the plug on any more payments or guarantees to KLM from the massive bailout that had previously been agreed.

In recent months intensive negotiations have taken place between the airline and trade unions representing cockpit, ground and cabin staff. Some agreements are already in place, however, the government has stipulated that agreements must be valid for the whole period of the loans -  mid 2025.  Whilst most ground and cabin crew unions have either accepted the deal or are considering it, pilots union VNV has not signed this deal, putting the whole bailout in jeopardy.

KLM's boss Pieter Elbers made the following statement  "I realise that we have asked a lot from all parties with the aim of KLM surviving this COVID-19 pandemic; abandoning normal negotiations and procedures and, under great time pressure in this time of crisis, agreeing to hand in working conditions for a longer period of time than the current collective labour agreements.  Last period, together with trade unions and the Works Council, we worked incredibly hard to reach agreements on the contribution of KLM employees in these difficult times. These are unprecedented times that also require unprecedented and unusual steps and approaches. The recent collective labour agreement agreements between KLM and the unions, as concluded on 1 October, show that this is also working together. That is commendable, as is the daily commitment of all KLM colleagues in these difficult times.

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. 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.

I would like to express my thanks to the five unions that signed the commitment clause and that have assumed their responsibilities. At FNV, we await the internal deliberations. For the time being, I can only call once again on the pilots' union VNV to take this final step and to fulfil its commitment by signing this clause. In the interests of its members, all KLM employees and the future of our company.

I have only one goal in mind and that is for KLM to survive this crisis. This will only succeed if we all keep the general interest in mind and are prepared to make a contribution that goes beyond our own position."

The Air France-KLM group recently reported a €1.7 billion total loss in the last quarter, with losses for the year to the end of September over €6 billion. The group is set to shed over 12,000 staff members as part of a drastic restructuring and resizing programme. However, its very survival is conditional on the bailouts being received by both the French and Dutch governments. The announcement on Saturday that the Dutch one is currently on hold puts the long term future of the group in its present shape in serious doubt. 

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