Update on government conditions attached to the KLM load package: 30% cut in costs
KLM was the subject of media attention due to a letter sent by the state agent to the Senate of the Dutch Parliament regarding conditions the government attached to the KLM loan package. KLM has published the following statement, which clarifies a number of points:
KLM would like to reiterate how grateful it is to the government for the support we received in 2020. We see it as our duty to repay the loans we received as soon as possible. KLM has utilised a total of € 942 million from the loan package, € 311 million of which has already been repaid. When KLM accepted state aid in 2020, it signed up to terms and conditions, which still remain in force.
One of the conditions the Dutch government attached to the loan package was that KLM should cut its controllable costs by 15%. KLM has more that met this demand, managing to reduce its controllable costs by 30% over the last year. This rapid cost reduction, combined with the drastically reduced NOW emergency job-retention scheme, made KLM one of the best performing airlines in Europe over the last three quarters.
Part of this is due to the employment conditions-based contribution paid by almost all KLM employees. Under this arrangement, personnel contributed up to 20% of their salary, depending on their income bracket. Agreements were reached with the trade unions on this matter. All the collective labour agreements (CLA) meet the employment conditions-based contribution requirement. The CLA for cockpit crew ran until 1 March 2022, while the current CLAs for ground personnel and cabin crew run until the end of 2022. A new CLA for cockpit crew has been delayed by the International Labour Organization (ILO) report, which criticises the state-imposed terms and conditions. Discussions around the pilots' CLA will continue over the next few weeks.
KLM has also further developed its sustainability agenda in line with government conditions. Constructive dialogue has taken place with the Ministry of Infrastructure and Water Management over the last few months and an implementation plan has been drawn up that answers the government's wish that KLM's efforts in this area should be easier to follow. KLM is on track regarding sustainability and operates every flight with a small percentage of sustainable aviation fuel. KLM has also committed to the Science Based Targets initiative that helps businesses comply with the Paris Agreement on Climate Change.
KLM is an international company employing approximately 25,000 people of many different nationalities. A small number (2.9% of the workforce) of the flying personnel live outside the Netherlands and make use of KLM's commuting scheme. KLM, the Dutch Airline Pilots Association (VNV), and the FNV Cabin Crew and VNC Cabin Crew trade unions acknowledge that they must always act in accordance with existing legislation and regulations. KLM has established a workgroup with the three unions involved. Its aim is to find a solution as quickly as possible that is also acceptable to the unions.