KLM 3.4 billion euro bailout hits crisis as unions refuse paycut plan
02 November, 2020
The Dutch government on Saturday (Oct 31) suspended plans to help beleaguered national carrier KLM with a multi-billion-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, which said it could not remain afloat without a massive government injection to save lots of KLM, the world's oldest airline hit hard by the coronavirus pandemic.
"The planned state aid is not going right through. It's disappointing but that is the case," Finance Minister Wopke Hoekstra told reporters in The Hague.
"It's really important given that everyone take their responsibility and realise that KLM is within an existential crisis," the minister said after talks with KLM.
The Dutch cabinet's decision follows a day of intensive talks between KLM and its own unions to reach agreement over the deal.
Hoekstra gave KLM and unions representing pilots, cabin and ground crew until 12:00 pm (1100 GMT) on Saturday to sign the agreement to unlock the 3.4 billion euro injection.
While talks are still ongoing with several unions, the Dutch pilots' union VNV have refused to sign what they termed a "last minute" change to conditions for the deal.
The bitter feud centres around a clause in the agreement which asks the troubled airline's staff to take wage cuts for another five years.
KLM this week presented the Finance Ministry with the austerity plan, which demands a 15 percent cut in costs and will see 5,000 jobs being shed as a result of the global impact of the coronavirus pandemic on flights.
In addition, it included an agreement from unions to cut pilots' salaries until March 2022 and ground and cabin crew salaries before start of 2023.
But Hoekstra on Friday rejected the program, insisting on wage cuts to perform concurrently with the government's five-year bailout package.
"GREAT UNCERTAINTY"
"We've not signed," a VNV representative told AFP shortly after the deadline passed.
"We had an agreement set up with KLM on October 1 and now they (the government) are going back onto it," said the representative, who declined to be named.
"A deal is a deal," he said.
Talks are also ongoing with umbrella union FNV which accused the federal government of "creating great uncertainty with changes at the 11th-hour".
"We don't realize why KLM and the cabinet require extra commitment at the last second," FNV said in a statement to AFP.
Nonetheless it added: "As FNV we will never endanger the future of KLM."
Some 3,000 pilots within the airline are said be the hardest hit by the austerity plan, with wage cuts as high as 20 percent, Dutch news reports said.
Other unions, however, have signed the deal including cabin crew union and the aerospace technicians' union, saying keeping KLM flying was the first priority.
"We're staring at the bottom of the barrel," Dutch Union of Aerospace Technicians (NVLT) chairman Robert Swankhuizen told the RTL Nieuws private broadcaster.
"Squabbling any longer jeopardises state aid," he said.
Air France-KLM posted a net lack of 1.7 billion euros (US$1.9 billion) for the 3rd quarter, weighed against a 363 million euros profit year-on-year.
Source: www.channelnewsasia.com
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