KLM response to fifth state agent report

In 2020, KLM found itself facing a crisis caused by the Covid-19 pandemic. The Dutch government came to our rescue by providing us with a support package that consisted of a €1 billion direct loan and a guarantee on a €2.4 billion credit facility. We are grateful for this support.

The conditions for the government loan and guarantee on the credit facility focused on (i) reducing controllable costs, (ii) an employment conditions-based contribution by employees, (iii) sustainability and quality of life conditions, (iv) other conditions such as the prohibition on the payment of dividends.

These conditions were laid down in the Framework Agreement. Anyone reading the State Agent’s final report might think that KLM was unconcerned about the government’s conditions, but that is by no means the case.

To summarise, we can say that:

-      KLM comfortably achieved the 15% reduction in controllable costs in 2020, 2021 and 2022;

-      KLM employees made an employment conditions-based contribution – based on their ability to pay – of between 0% and 20% in the first 17 months of the crisis;

-      550 new ground staff have been hired in KLM operations at Amsterdam Airport Schiphol, solving the operational problems that arose starting in May 2022;

-      The loans have been repaid – with interest – and the repayment of deferred wage tax has begun;

-      KLM began recording positive financial results again in 2022;

-      A commercial credit facility has been concluded with 14 banks so that government aid could be terminated as of April.

Changing economic circumstances and scarcity in the labour market posed new dilemmas and forced KLM to make tough choices, which have proved successful. Government support has been effective and KLM has successfully survived the crisis. Travellers can rely on us, our network has been preserved and the loans were repaid much sooner than anticipated. KLM’s reporting has always been correct, factual and scrupulous, including in its annual report, and it has always informed the relevant ministries of its considerations.

In view of the above, we read the State Agents final report with some astonishment. It is a mixture of opinions and facts.

For example, the State Agent makes assertions about our cost savings in the current year, 2023, but the outcome is in fact still uncertain. He also claims that the European Commission approved KLM’s support package based on the Dutch government’s conditions. That was not the case.

The report seems to argue that the government loans, Temporary Emergency Bridging Measure for Sustained Employment (also referred to as the emergency job retention scheme or NOW) and deferred wage tax are inextricably linked. That is not the case. The conditions applied to the government loans (government loan and the banks’ government-guaranteed credit facility), but not to the emergency job retention scheme support and not to the deferred wage tax. After all, the latter two are governed by their own conditions to which KLM has adhered and, to the extent still applicable, will continue to adhere. They were generic support measures applicable to all companies in the Netherlands. All emergency job retention scheme requests by KLM were assessed by external auditors and no breach of the rules was identified whatsoever.

The State Agent furthermore expresses a number of personal opinions, for example about what he alleges to be KLM’s privileged position at Amsterdam Airport Schiphol and his claim in the presentation letter that the airline industry cannot be considered a free and competitive market. Competition does not exist solely at Schiphol, however, but also at the hubs in Frankfurt, Istanbul, Dubai and even the Far East.

The State Agent also targets our pilots. This is not justified. We vouch for all KLM employees, we conclude agreements with the unions about terms and conditions, and we therefore wish to dissociate ourselves from the State Agent’s comments in the report.

KLM is optimistic about the future. Our 33,000 employees are grateful for the government’s support and proud that KLM has emerged from this difficult period. It is time to look forward and to work together to build a strong and more sustainable airline industry.