The Dutch government is to halt its multibillion-euro COVID-19 bailout to national carrier KLM amid a standoff with a pilots’ union about terms of the rescue package, Dutch Minister of Finance Wopke Hoekstra said on Saturday.
The dispute, if not resolved, could have dire consequences for KLM, which employs about 30,000 people.
The company on Friday announced that it recorded a loss of 234 million euros (US$273 million) in the third quarter of this year as a result of the aviation slump caused by the COVID-19 pandemic.
“Without this loan, KLM will not get through this difficult time,” chief executive Pieter Elbers said in a statement. “This makes this impasse extremely worrying.”
The Dutch government in June threw KLM a 3.4 billion euro lifeline to help the airline survive the sharp downturn in air travel amid the pandemic.
The package is made up of a 1 billion euro loan and 2.4 billion euros in guarantees for bank loans.
However, there were strings attached, including a demand that KLM cut costs by 15 percent, and improve its sustainability.
“It is up to KLM and the unions to ensure that the conditions set are still met,” Hoekstra said in a letter to the Dutch parliament.
KLM submitted a restructuring plan to the government on Oct. 1, in which labor unions representing pilots, cabin crew and ground staff agreed to pay cuts.
However, the agreements only apply until 2022; Hoekstra is seeking assurances from KLM that unions would agree to pay cuts throughout the duration of the bailout, likely five years.
KLM said five labor unions agreed to sign a “commitment clause,” saying their members would agree to pay cuts for the full duration.
It said one of the unions representing cabin and ground staff was still considering the matter, while the pilots’ union did not sign.
Hoekstra called the pilots’ stance “very disappointing and risky.”
The pilots’ union said its members already have agreed to a 20 percent pay cut and that they are committed to “continue taking responsibility to get KLM through the crisis and make it a healthy company again.”
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