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Netherlands puts KLM bailout on hold after pilots reject wage freeze

Stock MarketsOct 31, 2020 03:45PM ET
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© Reuters. A KLM Boeing 737 plane lands at Tegel airport in Berlin

THE HAGUE (Reuters) - The Dutch government on Saturday put on hold its plan to bail out KLM, the Dutch arm of Air France (PA:AIRF)-KLM, after pilots rejected a wage-freeze until 2025, Finance Minister Wopke Hoekstra said.

KLM had been due to receive a 3.4 billion euro ($4.0 billion) package, including 1 billion euros in direct loans. from the government to help it cope with the damage from the coronavirus pandemic.

"I find it very disappointing, but this way we cannot move forward with the loan now," Hoekstra told journalists.

The pilots' union argued that it had already agreed to a freeze until March 2022, and could not now change that agreement at the last minute.

Ahead of the government announcement, KLM CEO Pieter Elbers had said that "without this loan, KLM will not make it through these challenging times".

In a statement, he said KLM would not immediately go bankrupt but that its reserves "cannot last more than a few months".

In a letter to parliament, Hoekstra left the door open for the bailout if all KLM employees agreed to the five-year wage freeze.

"It is up to KLM and the unions to ensure that they meet the government's demands after all," he said, adding that the second wave of the coronavirus pandemic had changed expectations about how soon airlines could bounce back.

"The outlook is sombre, that makes it all the more important to have a good restructuring programme in place to work towards KLM's long-term recovery," he wrote.

Unions representing ground and cabin crews have agreed to the extended wage freeze, which is set to last as long as the airline receives government support.

Air France-KLM on Friday reported a 67% drop in third-quarter revenue to 2.52 billion euros, just as a new COVID-19 surge poses further threats to an industry devastated by the pandemic and the ensuing collapse in long-haul travel. The airline's net debt rose by 3 billion euros to 9 billion euros.

Netherlands puts KLM bailout on hold after pilots reject wage freeze
 

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Comments (3)
Remko Phone
Remko Phone Nov 01, 2020 3:21PM ET
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Greedy selfish bаstаrds. Your company is almost bankrupt because and still demand lofty salaries from the taxpayers. Sсumbags, let KLM go bankrupt
William Smith
William Smith Oct 31, 2020 8:16PM ET
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Fire them all. Lots of very qualified pilots looking for work at 60% current pilots pay.
Kaveh Sun
Kaveh Sun Oct 31, 2020 10:55AM ET
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Greedy union. Let them goes bk n pilots unemployed but a pay freeze freezes their fees.
 
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