Dutch government freezes state aid destined to help KLM

On Saturday October 31st, the Dutch government took the decision to freeze the release of 3.4 billion euros aimed to provide a lifeline to KLM in the face of the coronavirus crisis. The government’s decision came after some of the unions did not sign the requested five-year agreement.

Dutch Finance Minister, Wopke Hoekstra, had given KLM management and the unions until Saturday 11:00 GMT to sign the agreement that would secure the release of financial aid in the form of loans to the Dutch branch of Air France-KLM. “The planned aid is not going through,” said Hoekstra. “It is disappointing but it is a fact.”

Some of the trade unions involved in the negotiations did not sign the agreement. The reason cited for not signing was that they found “last minute” changes on the issue of lower wages, which were supposed to be applicable for a duration of five years. On October 31st, KLM’s management release a statement delineating what had happened, and what’s at stake.

“KLM is in the worst crisis of its 101 years of existence. Covid-19 has undermined the good results of recent years. In order to secure the future of the company and its network for the Netherlands, the loan and government guarantees on bank loans totaling EUR 3.4 billion are crucial. KLM is very grateful to the Dutch government for its support and ability to provide financing at this time.

The government has set requirements for the granting of the package. An important requirement in this respect is that all KLM employees must make a labour contribution during the term of the loan (expected until 2025). In recent months intensive negotiations have taken place with the trade unions in the three collective labour agreement domains (Cockpit, Ground and Cabin) about the fulfillment of the employment condition contribution of KLM employees, in accordance with the percentages and structure required by the government.

The results of these negotiations have been laid down in ‘outline collective labour agreements’ and are included as such in the restructuring plan that KLM submitted on October 1st. These agreements give concrete form to this contribution until the beginning of 2022 (Cockpit) and the end of 2022 (Ground and Cabin).

In October, KLM and the trade unions worked on the main lines of these agreements in more detail. At the same time, on behalf of the government, the Minister of Finance, with the help of a consultancy firm, is assessing the entire restructuring plan submitted by KLM. This evaluation should be completed by the end of October. Specifically in the area of employment conditions, the Minister emphasized to KLM that it should be more explicitly agreed and laid down that the contribution of all KLM employees should apply for the full duration of the loans.

The planned aid is not going through. It is disappointing but it is a fact. 

Wopke Hoekstra, Dutch Finance Minister

In order to meet this requirement, without repeating the negotiations altogether, there is a ‘commitment clause’ which will be included in the agreements between KLM and the trade unions. In this clause, all unions must each commit themselves to continue to make the labour contribution in accordance with the requirement of the Ministry of Finance (the exact details of which are up to KLM and the unions).

The management of KLM yesterday made an urgent appeal to the unions to agree to this. Today five trade unions CNV, De Unie, NVLT, VNC and VKP signed this clause. FNV (Cabin and Ground) is still considering the matter. The pilots’ union VNV has not signed this clause. This means that KLM does not meet the requirements set by the Minister. This outcome was communicated to the Minister this afternoon.

I realize that we have asked a lot from all parties with the aim of seeing KLM survive this Covid-19 pandemic; abandoning normal negotiations and procedures and, under great time pressure in this time of crisis, agreeing to hand in working conditions for a longer period of time than the current collective labour agreements. Last period, together with trade unions and the Works Council, we worked incredibly hard to reach agreements on the contribution of KLM employees in this difficult period. These are unprecedented times that require unprecedented and unusual steps and approaches. The recent collective labour agreement agreements between KLM and the unions, as concluded on October 1st, show that this is also working together.

It is regrettable that it has not been possible today to get all the unions to sign the ‘commitment clause’ by the end of October. This was the final step required for approval from the Cabinet. Without this loan, KLM will not get through this difficult time. This makes this impasse extremely worrying.

I would like to express my thanks to the five unions that signed the commitment clause and that have assumed their responsibilities. At FNV, we await the internal deliberations. For the time being, I can only call once again on the pilots’ union VNV to take this final step and to fulfill its commitment by signing this clause. In the interests of its members, all KLM employees and the future of our company.”

KLM President & CEO Pieter Elbers. Amstelveen, October 31st, 2020