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KLM Bailout Back On Track Following Agreement With Pilots

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On Tuesday, KLM announced that, following a signature from the Dutch Airline Pilots Association, it had reached an agreement with all the trade unions over employment conditions until 2025. This should fulfill the government’s requirements for its frozen bailout package. With the Dutch authority’s new advice against all international travel lasting until January, the funds are needed now more than ever.

KLM bailout union talks done
Is KLM on its way to finally receive government funding after union talks concluded yesterday? Photo: Getty Images

The Dutch government is holding KLM’s €3.4 billion ($4.0 billion) rescue package back until the carrier can satisfy a number of conditions. On Friday, the government rejected the airline’s restructuring plan due to what it considered to be an insufficient commitment from employees to freeze wages.

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Incredibly tense past few days

As KLM is suffering “the worst crisis in its 101-year history,” it urgently needs the government to release the funds. Thus, it was back to discussions with the trade unions. The carrier said it concluded talks yesterday, on November 3rd, when the Dutch Airline Pilots Association, VNV, as the eighth and final union to do so, signed an additional “commitment clause.”

“The past few days have been incredibly tense for everyone. The company has been under enormous pressure, its reputation has suffered, and there have been internal divisions. In the end, however, KLM and the trade unions got through it together, and that’s really what it’s all about,” Pieter Elbers, KLM’s CEO

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, said in a statement seen by Simple Flying.
KLM crew getty
The Dutch government was previously unsatisfied with the employment conditions part of the airline’s restructuring plan. Photo: Getty Images

At least two years more than initially agreed

One of the conditions the Dutch government has placed on its state-guaranteed loans is that KLM’s staff must give up certain employment conditions for the loan duration, which is until 2025. The restructuring plan which KLM submitted on October 1st only contained agreements until early 2022 for cockpit crew and late 2022 for cabin crew and ground staff.

To meet the government’s requirement for the entire loan-period without having to reenter formal and lengthy negotiations, KLM says it inserted a “commitment clause” into its agreement with the unions. Exactly what this clause contains remains undisclosed, but KLM believes it to be enough for the Minister of Finance, Wopke Hoekstra, to reassess and approve its restructuring plan.

“Now that all eight trade unions have signed the commitment clause, we have taken an important step,” Mr Elbers further said in his statement. “The far-reaching measures we must take, and the accompanying processes and procedures are new and complex for KLM and the trade unions.”

KLM Getty
The world’s oldest airline is in a lot of trouble. Photo: Getty Images

Advise against all international travel

Like so many other carriers, KLM is buckling hard under the weight of new travel restrictions across Europe. On Tuesday, the Dutch government issued negative travel advice for journeys outside of the Netherlands until at least January 2021. Just last week, the airline sent ten of its workhorse Boeing 737s for storage at Groningen Airport Eelde, along with two A330s. Unfortunately, with the newest restrictions, we may see many more aircraft returning to long-term storage in the near future.

What do you think, will the Dutch government finally release the KLM rescue package in its entirety? What will the new negative travel advice entail for the airline? Let us know your thoughts in the comments.

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