Airline KLM has secured a €3.4 billion financing facility
through an agreement with the Dutch government to shore up its liquidity and “weather
the Covid-19 crisis”.
According to the carrier, the agreement comes with a set of conditions
on the group, including terms of employment, the variable remuneration of
management and top management, restructuring, dividend payments, governance,
network quality, sustainability and liveability.
The package still needs approval from the Netherlands’
parliament and the European Commission. Once approved, KLM said it will begin
consultations with trade unions to work out the conditions the government wants
to impose.
The deal consists of a 90 per cent state-backed revolving
credit facility of €2.4 billion and a direct state loan of €1 billion with a
maturity of 5.5 years. KLM said it intends to use the first €665 million
drawing under the new facility to repay and terminate its existing credit
facility, which it drew down in March. It will also draw €277 million of the
state loan, however, the airline said it will need to meet certain conditions
to do so, including a restructuring plan.
According to Bloomberg, the environmental conditions placed
on the agreement will see KLM cut the number of night flights by 20 per cent to
reduce aircraft noise at Schiphol airport, encourage rail travel on certain
short-haul routes and halve its CO2 emissions by 50 per cent per passenger by
2030.
KLM CEO Pieter Elbers commented: “Due to Covid-19 KLM is
currently in an unprecedented crisis. The financing package is necessary to
secure the long and difficult road of recovery in the coming period. This is a
very important step and I express my gratitude on behalf of all KLM colleagues
to the Dutch state and the banks for their confidence in our organisation and
our future. With the financing package, KLM can continue to fulfil its
important social role in economic recovery and sustainability. In the coming
period, we will be working on the restoration of the route network and, on the
other hand, on the development of the restructuring plan and the far-reaching
conditions that have been imposed on the package.”
The deal has received the approval of the Air France-KLM
board of directors. The group’s other airline, Air France, received a €7
billion funding package from the French government in April, which also came
with a set of environmental conditions that will see the carrier encourage
domestic traffic to shift to rail travel where possible.