The government of Netherlands froze €3.4 billion-worth of financial aid to KLM Royal Dutch Airlines (KLM), after the trade unions of the airline refused to sign a five-year agreement related to stricter terms of pilot wage cuts.
In order to deal with the financial downturn related to the COVID-19 pandemic, KLM should have signed an agreement on €3.4 billion government bailout until October 31, 2020. However, the airline refused to reach the agreement after the government’s announcement that the wage cuts for the company’s employees would be extended for at least a five-year period until 2025. Earlier on October 1, 2020, following the submitted airline’s restructuring plan, the trade unions of KLM agreed to wage cuts by 20%, but only for a period until 2022.
If the agreement among KLM and the government of the Netherlands would not be reached, the air carrier „would not get through this difficult time“, speaking to local media said Pieter Elbers, the CEO of KLM.
According to the airline’s financial report of Q3 2020, KLM recorded a €234 million loss as a result of the drop in the air travel demand related to the COVID-19 pandemic.
In June 2020, the Dutch government committed to provide KLM a €3.4 billion financial package consisting of a €1 billion governmental loan and €2.4 billion in guarantees for bank loans. In order to receive the aid, KLM was asked to commit to cut costs by 15% and improve sustainability.