Response of KLM to state agent’s third report

The third report issued by the state agent – who oversees compliance with the conditions attached by government to the loan package – was published on Thursday. The report states that KLM has so far comfortably met the conditions set by government. Instead of the required 15% cut in controllable costs, KLM has achieved a 30% reduction. This has, in part, been possible through the huge efforts of KLM employees, making substantial employment conditions-based contributions during the Covid-19 crisis.

In 2020, KLM utilised €942 million of the total loan package of €3.4 billion. In May and June this year, KLM repaid two thirds of this amount, leaving only €277 million of the utilised government loan outstanding. KLM also intends to repay this amount this year. Moreover, government has offered companies hard-hit by the pandemic the option of deferring wage‑tax payments. In KLM’s case this amounts to €1.5 billion, which will be paid back with interest within the specified five-year period.

KLM also took advantage of the government’s emergency job-retention scheme (NOW) set up to help all companies running at a loss as a direct result of the Covid-19 pandemic. KLM received a total of €1.9 billion under the scheme, which it does not have to repay.

Shared ambitions
In the report, the state agent expressed concerns whether the measures taken by KLM are structural enough to guarantee the long-term health of KLM. “KLM shares the state agent’s ambition to emerge strong and competitive from the crisis. It has already taken numerous steps to meet this aim and will, of course, continue to do so,” says Chief Financial Officer & Managing Director, Erik Swelheim. “We are confident that we will continue to connect the Netherlands with the rest of the world as a future-proof airline, while focusing on achieving greater sustainability. The fact that we’ve booked favourable operational results over the last three quarters and are outperforming our European competitors, strengthens our conviction.”

KLM particularly regrets that the report does not do justice to the efforts of all KLM colleagues during the last two difficult corona years. In addition, the report contains a number of inaccuracies and/or suggestive formulations that have already been shared with the State Agent in writing. KLM will discuss this matter further with the government in the near future.

Tax avoidance
The state agent also stresses that KLM must guard against facilitating potential tax avoidance by employees living outside the Netherlands, pointing to an issue highlighted two years ago in relation to which the state agent sees little progress. “We understand the agent’s desire for quick solutions, but KLM also intends to comply with agreements reached with its employees and the trade unions. A workgroup representing KLM, the Dutch Airline Pilots Association (VNV), and the FNV and VNC Cabin Crew unions is working on this issue,” Swelheim explains.

KLM is an international company with around 25,000 employees of many different nationalities. A small percentage of its flight personnel (2.9% of the total workforce) live in another country and make use of KLM’s commuting scheme.

Network quality
The state agent also refers to the new policy framework for monitoring and assessing network quality at Schiphol, in which context KLM and its partners perform a significant role. KLM’s network connects the Netherlands to the world’s most important economic regions and KLM’s European network links into its intercontinental network. Despite its relatively small domestic market, transfer passengers enable KLM to maintain a global network, facilitating international business operations and contributing to an attractive business climate and employment opportunities in the Netherlands. All KLM’s destinations play a part in maintaining the network. 

For a more detailed explanation of our network, please see this video: