As the coronavirus pandemic is reshaping the commercial aviation industry, airlines are taking all measures necessary to weather the storm and survive this unprecedented crisis. During difficult times like these, more than ever cash is king, so all carriers have launched a series of initiatives to improve their cash position and resist for as long as possible a situation that sees all established operators in the business burn millions of dollars every day.

Dutch flag carrier KLM, the oldest carrier in the world still operating under its original name, has confirmed in a stock exchange note that final approval has been granted on a 3.4 billion euro ($4.04 billion) loan package consisting of a government loan and guarantees on bank loans.

A KLM 747 departs Los Angeles. (Photo: AirlineGeeks | James Dinsdale)

Concessions Obtained from Unions

The approval is “is crucial to securing the future of the airline and its network for the Netherlands” says the note, and was conditional on the acceptance of certain conditions by KLM’s pilots, cabin crews and ground personnel. The carrier and the unions have worked very hard at defining the new labor collective agreement incorporating the conditions imposed by the Dutch government as conditional to the approval of the loan.

During the last week of October, wage concessions proposed by KLM staff were considered insufficient by the Dutch government, putting the approval in jeopardy. But on Nov. 6, an agreement was found on the austerity measures that will remain in place until early 2022 for cockpit crew and late 2022 for ground and cabin personnel. However, contributions will have to be made on behalf of all employees for the entire duration of the loan, which is due to last until 2025. This has been guaranteed by a new “commitment clause” included in the new collective agreements that will not require a re-negotiation of working conditions once the currently agreed austerity measures elapse.

“The past few days have been incredibly tense for everyone. The company has been under enormous pressure, its reputation has suffered, and there have been internal divisions. In the end, however, KLM and the trade unions got through it together, and that’s really what it’s all about,” Pieter Elbers, KLM’s CEO, said in a statement reported by Simple Flying.

KLM’s parent company, KLM-Air France holding, reported an operating loss of 1.05 billion euros for the third quarter of the 2020 financial year. Revenues were down 67% at 2.52 billion euros compared to the previous year.

In mid-October, KLM retired its last Boeing 747-400 aircraft one year earlier than planned due to lower demand. Most units were grounded last March but three were kept in service to perform cargo flights between the Netherlands and China, NL Times reports.

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Vanni Gibertini

Vanni fell in love with commercial aviation during his undergraduate studies in Statistics at the University of Bologna, when he prepared his thesis on the effects of deregulation on the U.S. and European aviation markets. Then he pursued his passion further by obtaining a Master’s Degree in Air Transport Management at Cranfield University in the U.K. followed by holding several management positions at various start-up carriers in Europe (Jet2, SkyEurope, Silverjet). After moving to Canada, he was Business Development Manager for IATA for nine years before turning to his other passion: sports writing.

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