KLM on Edge of Bankruptcy After Pilot Union Rejects Salary Reduction
KLM is on the verge of bankruptcy after a pilot union rejected a salary reduction which is a prerequisite of a vital government loan.
COVID-19
As major airlines across the world are struggling to survive amidst the current corona virus crisis, many national governments have stepped in to help offering loans to keep the carriers afloat.
One of these airlines is KLM Dutch Royal Airlines, which is part of an airline group together with French partner airline Air France.
Loan
Last summer, the Dutch government announced a support package worth 3.4 billion euro. It was however not a blanket loan, as the government came with a set of demands.
Among others, the national government of the Netherlands demanded Air France-KLM to protect Amsterdam Airport’s hub function, a reduction of night flights and an active contribution towards environmental sustainability.
Salary
Another major demand of the national government were salary reductions.
One prerequisite for the loan package read: “Employees who earn more than three times the average salary are asked to give up at least 20% of their salary to ensure that the strongest shoulders carry the heaviest burden.
“Employees who earn less are asked to give up a lower percentage.”
Cabin crew and pilots
Although five labour unions, among which those representing cabin crew and ground staff, agreed with the demands, one pilot union refused to give in.
The VNV (Union of Dutch Commercial Pilots) refused to put its signature under the agreement with KLM. According to the union, Dutch Minister of Finances Wopke Hoekstra reportedly came up with last-minute extra demands.
The union said that the pilots it represents are willing to agree with a salary reduction until 2022 and do whatever is needed to save KLM in the years after, but are not willing to already agree in advance with loan reductions up to 2025.
The VNV also noted that while the pilots do earn well, many have financial commitments [such as mortgages] which makes it hard to agree.
Opposition
Other KLM employees, as well as the Dutch government and public, are however livid with the refusal of the VNV union. Local media even noted that KLM pilots already earn 24% more on average compared to their German colleagues.
Needless to say, it has created lots of tensions between cabin crew, ground support and pilots. Ground employees even left sarcastic “thank you” notes overnight in the cockpit of KLM aeroplanes.
The note reads: “On behalf of all other KLM employees and their families: THANK YOU. We will see you at the UWV [Dutch social welfare office].”
Grondpersoneel kan bloed piloten @VNVPresident wel drinken. Boodschap aan de eerste de beste piloot die morgen deze KLM-737 meekrijgt @NHNieuws pic.twitter.com/MIMyTXm2AJ
— Doron Sajet (@dsajet) October 31, 2020
Bankruptcy
According to the largest newspaper in the Netherlands ‘De Telegraaf’, a bankruptcy of KLM is now a real possibility as the Dutch government refuses to grant a loan without the pilots willing to take a pay-cut.
It even headlined that the Dutch flagship carrier is “on the edge of bankruptcy“, which sent major shockwaves through Dutch politics and society.
The Dutch government has refused to negotiate directly with the pilot union, saying they are only willing to discuss terms with KLM’s management directly and that it is up to the pilots to reach an agreement with the airline which fulfils the government prerequisites for the loan package.
Negotiations
The Dutch pilots who refused to accept the pay-cut were reportedly surprised as well with the pushback they received from their colleagues and the flat-out refusal of the Dutch government to give in.
They now said they are willing to reopen negotiations with KLM management, although it is unsure if the pilot union is now willing to budge. It will therefore still be an autumn full of uncertainty for KLM and Dutch aviation.
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