MIAMI – Dutch airline KLM (KL) has submitted a restructuring plan to the Dutch Ministry of Finance to receive a €3.4bn loan to stay afloat during the COVID-19 pandemic.
The submission of the plan follows earlier warnings from Dutch Finance Minister Wopke Hoekstra who said the airline needed to lower costs for the survival of the Air France-KLM alliance.
Coming before the anniversary next week of 101 years of operation for KL, the plan details how the airline shall both survive the crisis and meet the conditions imposed by the Dutch government.
A Plan for Survival
The plan draws on aspects such as “reassessment of strategy, cost-cutting initiatives, financial considerations, and how KLM staff will contribute by way of reduced employment conditions” while stressing that the existing business model is still effective.
KL also faces a 45% reduction in European capacity in November, the loss of between 4,500 and 5,000 full-time jobs in 2021, and the retirement of the Boeing 747-400 fleet. All measures play into the Dutch governmental requirement to reduce controllable costs by 15%.
KLM President and CEO Pieter Elbers additionally stated “Today we took a major, exceedingly important step towards restructuring KLM. The plan we submitted to the Ministry of Finance today is a condition for obtaining a financial package, making this an important milestone in KLM’s recovery.”
The CEO added, “The aim is to ensure that KLM survives this crisis and emerges stronger than before. The measures are far-reaching and painful for KLM staff, but they are necessary.”
KL, facing tough times financially, will hopefully benefit from the governmental loan and eventually make a full recovery.
KLM Boeing 777-300ER in Amsterdam Schipol Airport (KLM). Photo: Martin Kulcsar