MIAMI – As Air France-KLM CEO, Ben Smith said that government aid will not be enough to rebuild the company as expected, Smith has given up his 2020 salary as urged by the Dutch Finance minister, Wopke Hoekstra.
Further, the airline group may get state guarantees and direct loans in a €10bn French-backed rescue deal for Air France (AF) and in a €2bn Dutch-backed lending for KLM (KL) to face the COVID-19 crisis, according to Reuters.
AF-KL group future plans
Waiting for finalized agreements in the coming days, Smith already said that the group is accelerating a restructuring plan for the AF short-haul network and an expansion one for Transavia (HV), another airline of the French-Dutch company.
As the holding corporation loses €25m every day, a normality status will not be achieved prior to two years, Smith added. Thus, it expects partial unemployment during that period.
This situation would be supported by French government special unemployment measures, which are planned to cover payroll costs amid the COVID-19 crisis. According to SimpleFlying, AF has saved €1.1bn in 2020 in relation to these state actions.
However, losses from purchased tickets and low passenger demand during the upcoming months have not been taken into account, which may delay the putting in the air of the carrier’s parked fleet, according to Smith.
Wage waivers as part of the Dutch support deal
Regarding current conditions, Smith could still get a higher 100% annual bonus of his €900k annual salary, depending on his and the group’s performance, as reported by NLTimes.
But Dutch Finance minister, Wopke Hoekstra said to media that “bonuses in these times of crisis are unwise and incompatible with support funded by taxpayers’ money.” In light of this, Smith gave up his 2020 salary to receive state support.
In the statement, the AF-KL CEO said that the cut includes forfeiting his annual short-term variable compensation. On its part, KLM President and CEO, Pieter Elbers said he will take a 20% pay cut and also gave up his bonus for the remaining months of 2020.
With these moves, the holding company is ensuring it obtains Dutch government support and financing while it expects to maintain afloat part of its plans in the next months.