Dutch Government Holds Back 3.4 Billion Euro Aid Package As Pilots Refuse 5Y Freeze On Pay Raises

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Air France and especially their smaller daughter KLM have a problem as the Dutch government has decided to put a hold on the 3.4 Billion Euro in state aid that was designed to bail out KLM.

The reason is that the pilots union has refused to agree to a 5 year free on pay raises which is conditional for receiving aid – a hurdle that could cost KLM their wings.

AirFrance-KLM was the first European airline that secured a sizeable rescue package from the Dutch & French government in late April. Of course none of these bailouts come without strings attached, after all we’re talking about billions in taxpayer funds and the government usually wants guarantees that the money isn’t squandered.

In Germany the Handelsblatt reported that pilots unions have only agreed to a free in pay raises until March 2022 and they don’t appear flexible.

In consequence KLM would not receive the 3.4 Billion in aid through a state loan which would lead the carrier down the road to insolvency, putting 30,000 jobs in danger.

Aviation24 quotes KLM management as saying:

… 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. …

All employee groups are expected to make concessions in order to get the airline back into shape. This includes reduction in work time, freeze in pay raises, retirements etc.

KLM’s financial reserves are expected to be exhausted by early 2021 so the airline only has a few months to secure liquidity and therefore survival.

Conclusion

Apparently the pilots unions of some carriers are still of the opinion that they can make outlandish demands and that their members are vital to the survival of the airline. This could be a dangerous miscalculation as not only puts it the entire rescue package on thin ice but it also misjudges the realities we’re living in today. There is now a surplus of pilots on the market, many of which have been let go by the biggest names in the industry and who are dying to get back in the air.

It’s incomprehensible how this union thinks their pilots could exempt themselves from a freeze on pay raises while all other unions representing KLM employees have agreed as part of the rescue conditions. That won’t buy them any popularity on the upcoming Christmas party (should there be one).

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