Two months after France decided to grant €7 billion to the airline group, the Netherlands comes to the rescue of Air France-KLM with €3.4 billion in state aid.

The aid will come in the form of two loans, one of €2.4 billion granted by eleven banks, including three from the Netherlands and eight international ones, 90% guaranteed by the Dutch State, and a second direct loan from the state to KLM for €1 billion. It has yet to be approved by the European Commission and the Dutch Parliament.

“Conditions associated with the direct state loan are linked to the airline becoming more sustainable as well as the restored performance and competitiveness of KLM, including a comprehensive restructuring plan and contributions made by employees,” states the group in a press release. Unlike Air France, the specific conditions linked to the aid received by KLM are not detailed.

To receive its €7 billion state loan from the French state, Air France committed to the closure of domestic routes when a rail alternative existed, a 50% reduction in its CO2 emissions per passenger and per km between 2005 and 2030, and a renewal of its fleet towards more sustainable aircraft, with a preference for Airbus catalog.

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Caught in the COVID-19 coronavirus pandemic, Air France has to make concessions. As a condition to the state aid granted by France, the airline will have to reduce short-haul routes to only connecting lines if a rail alternative exists.
 

The management of Air France-KLM welcomed the €10.4 billion state aid offered by France and the Netherlands to overcome the difficulties arising from the coronavirus crisis. Both countries hold 14% stakes in the airline group. 

“Thanks to the support of the Dutch and French states, I am certain that the Air France-KLM Group will emerge stronger than ever before following this crisis,” commented Air France-KLM Group CEO Benjamin Smith. 

“In the coming period, we will be working on the restoration of the route network and, on the other hand, on the development of the restructuring plan and the far-reaching conditions that have been imposed on the package,” detailed Pieter Elbers, CEO of KLM.

Air France is studying the possibility of axing 20% of its workforce to follow the 40% reduction in domestic capacity planned within two years. The cut would represent 10,000 jobs out of over 52,000 employees in the group