The Dutch government has suspended plans to support national carrier KLM with a multi-billion-euro bailout package after unions declined to sign a deal involving a five-year pay-cut plan.
The move puts the future of the Dutch arm of Air France-KLM into jeopardy, with KLM saying it would not remain afloat without a massive government infusion to save the world’s oldest airline, now hit hard by the coronavirus pandemic.
“The planned state aid is not going through. It’s disappointing but that’s the case,” Finance Minister Wopke Hoekstra told reporters after talks with KLM.
“It’s really important now that everybody take their responsibility and realise that KLM is in an existential crisis,” the minister said.
The Dutch cabinet’s decision follows a day of intensive talks between KLM and its unions to try and reach an accord over the bailout deal, which Hoekstra said would only go through if the airline adhered to a number of tough cost-cutting measures.
The minister gave KLM and unions representing pilots, cabin and ground crew until 12:00 pm (1100 GMT) on Saturday to sign the agreement to unlock the second tranche of the 3.4 billion euro injection.
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While talks are still ongoing with several unions, the Dutch pilots’ union VNV has refused to sign what they termed a “last minute” change to conditions for the deal.
The bitter feud centres around a clause in the agreement which asks the troubled airline’s staff to take salary cuts for the next five years.
KLM this week presented the Finance Ministry with the austerity plan, which demands a 15 per cent cut in costs and will see 5,000 jobs being shed as a result of the global impact of the coronavirus pandemic on air travel.
It also included an agreement from unions to cut pilots’ salaries until March 2022 and ground and cabin crew salaries until the start of 2023.
But Hoekstra on Friday turned down the plan, insisting on salary cuts to run concurrently with the government’s five-year bailout package.
“We have not signed,” a VNV representative told AFP shortly after the deadline passed.
“We had an agreement in place with KLM on October 1 and now they (the government) are going back on it,” said the representative, who declined to be named.
