EC Approves Major Aid Package for KLM

 - July 13, 2020, 3:14 PM

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

The European Commission has approved a €3.4 billion ($3.8 billion) Dutch aid measure including state loan guarantees and a direct subordinated state loan to KLM under the temporary framework adopted by the EC on March 19 to address the Covid-19 crisis.  

Travel restrictions imposed by the Netherlands and by many of KLM’s destination countries to limit the spread of the coronavirus has resulted in what the EC called a significant reduction of the airline's services and high operating losses. Although passenger traffic slowly has begun to recover since the gradual easing of restrictions starting at the beginning of June, KLM does not control enough liquidity to finance a ramp-up of activities. Therefore, the commission determined the support from the Dutch government to be essential for KLM to obtain vital liquidity. Furthermore, it added, the Netherlands has demonstrated that the airline has already explored and exhausted all other potential means to obtain private liquidity.

“KLM plays a key role for the Dutch economy in terms of employment and air connectivity,” said EC executive v-p in charge of competition policy Margrethe Vestager. “This €3.4 billion state guarantee and state loan will provide KLM with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak. The Netherlands imposed certain conditions on the aid measure with respect to profit allocation, working conditions, and sustainability. Very good. Member states are free to design measures in line with their policy objectives and EU rules.”

Operating as part of the Air France-KLM group, in which the Dutch state holds a 14 percent stake, KLM ranks as the Netherlands' second-largest private employer. Its workforce consists of 36,600 employees. “KLM is also a very important company for the Dutch economy, as it ensures the connectivity of the Netherlands with many destinations in Europe, with the Dutch regions overseas and the rest of the world,” said an EC statement. “Since the start of the coronavirus outbreak, KLM has also played an essential role in the repatriation of citizens and for the transport of medical equipment.”

The loan package was approved by the Air France-KLM board on June 25.