Dutch airline KLM handed €3.4b lifeline to ride out virus crisis
The Dutch national carrier KLM is to receive a state rescue package of 3.4 billion euros to help it survive the coronavirus crisis, and to reinvent itself as a more sustainable company.
The Netherlands will appoint a supervisor to the KLM board which, according to Reuters, will ensure the money goes exclusively to KLM and is not absorbed by the Air France-KLM parent company.
The support package is made up of a direct state loan of 1 billion euros and a separate credit facility of 2.4 billion euros provided by 11 banks – three Dutch and eight international – but guaranteed by the government.
Both loans, with a duration of five years, will be drawn on a pro-rata basis. First off, KLM will use the money to repay an existing loan of €665 million that was granted in March.
Thousands of jobs on the line
The KLM lifeline comes after France granted €7 billion in state funding to Air France in May. With their fleets largely grounded, both airlines have been hit hard by the Covid-19 pandemic.
Thousands of Air France jobs are in doubt as the company’s management prepares to deliver its reorientation and survival strategy to aviation industry unions on 3 July.
Following the bailout, Air France was told to improve its profitability and its environmental impact, and to start rethinking its regional network in France.
Likewise, the Dutch loan has been granted under the condition that KLM become a more sustainable airline.
It’s been asked to improve its performance and competitiveness through a comprehensive restructuring plan that includes contributions made by employees.
The company will suspend dividend payments to shareholders until the loans – which still need to be approved by the European Commission and Dutch Parliament – have been fully repaid.
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