The KLM restructuring plan rejected by the Dutch government
KLM and the unions are said to be in emergency talks. This follows the announcement on Friday that the Dutch government had rejected the airline’s restructuring plan. The reason for the rejection appears to be what The Hague sees as an insufficient commitment by KLM employees to freeze wages.
Billions of euros straddling the approval of the plan
According to Reuters, who in turn cited two sources from De Telegraaf, the government’s rejection of the plan was based on the unions’ refusal to freeze wages until 2025. The Dutch government made the bailout package dependent on its airline national 3.4 billion euros ($ 4 billion) restructuring plan, which was filed on October 1.
The plan includes a 15% cost reduction. The company will also lay off 20% of its workforce, which equates to around 4,500 jobs this year. In addition, the airline has pledged to reduce its carbon dioxide emissions by 50% by 2030. In the meantime, it seems that this has not been enough for The Hague, and negotiations are back on track. .
When asked to comment on the situation, a spokesperson for KLM confirmed to Simple Flying that the airline was indeed in talks with the unions. However, they were also keen to point out that the government’s official assessment of the plan has yet to be released.
Crucially important loan and guarantees
The news of the government’s rejection of the KLM plan comes the same day Air France-KLM released its third quarter results for the year. As expected, this made the reading rather gloomy. KLM announced losses of 234 million euros ($ 273.5 million) for the third quarter. The carrier warns that the fourth quarter numbers could be even more daunting, given the new set of lockdowns.
“To safeguard the future of our airline and the employment opportunities, the loans and loan guarantees offered by the Dutch government are of crucial importance”, Pieter Elbers, CEO of KLM, commented on the results and the still gloomy outlook for aviation throughout the year.
Mr Elbers also said that without the help of the government’s Temporary Emergency Jobs Retention Program (NOW), the carrier’s losses would have reached 500 million euros ($ 585 million).
Second wave may result in additional resizing
KLM also said that given recent developments and the second wave of the pandemic, and the “grim outlook” ahead, a further resizing of the organization will be considered. However, he did not say whether or not that would lead to more job cuts or potential fleet reductions.
The SkyTeam Alliance member also reported that its operating capacity would be down around 55% for the fourth quarter compared to 2019. This is even lower than in the third quarter, which stood at around 50%. Its partner airline, Air France, only plans 35% of capacity, but KLM is somewhat boosted by strong demand for freight.
Do you think the Dutch government is reasonable in its demand for a wage freeze? Or should he just approve the plan already? Let us know in the comments.