EU Approves Dutch Government Aid For KLM

KLM is the Netherlands’ second-largest private employer, with over 36,600 employees.
Credit: Nigel Howarth / Aviation Week

Dutch carrier KLM has secured EU approval for €3.4 billion ($3.9 billion) in government-support measures, which the European Commission (EC) described as “urgent liquidity support.”

“This €3.4 billion state guarantee and state loan will provide KLM with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak,” European Commissioner for Competition Margrethe Vestager said, announcing the ruling on July 13.

The EC highlighted KLM’s important economic role; KLM is the Netherlands’ second-largest private employer, with over 36,600 employees.

“KLM has suffered a significant reduction of its services, which resulted in high operating losses. Since the gradual easing of restrictive measures, as of the beginning of June 2020, air passenger traffic is slowly recovering. KLM does not have sufficient liquidity in order to finance the ramp up of its activities. Therefore, the support from the Dutch state is essential to obtain vital liquidity to face this difficult period,” the EC said.

The measures include a direct loan from the Dutch government, as well as a state guarantee on loans provided by a consortium of banks.

To qualify, KLM had to demonstrate that it was not in difficulty on, or before, Dec. 31, 2019. The Netherlands also had to show that it had “explored and exhausted” all other potential funding sources.

In March, the EC granted a temporary relaxation of its state-aid rules, which will run until Dec. 31, 2020. Recapitalization measures are also allowed until the end of June 2021. The EC said these dates could be extended, if needed.

Victoria Moores

Victoria Moores joined Air Transport World as our London-based European Editor/Bureau Chief on 18 June 2012. Victoria has nearly 20 years’ aviation industry experience, spanning airline ground operations, analytical, journalism and communications roles.