KLM non-agreement between management and unions kills state loans

The Dutch government on Saturday froze the release of public aid of 3.4 billion euros intended to help the airline KLM in the face of the coronavirus crisis, after the unions refused to sign a five-year agreement.

Mr. Hoekstra had given the management and the unions of KLM until Saturday 11:00 GMT to sign this agreement supposed to release aid, in the form of loans, to the Dutch branch of Air France-KLM.

The trade unions from the Dutch company had refused to sign this agreement, denouncing “last minute” changes on the issue of lower wages they were supposed to accept for a duration of five years.

The planned aid is not going through. It is disappointing but it is a fact,” Dutch Finance Minister Wopke Hoekstra told reporters.

KLM going through historical crisis since their founding 101 years ago.

KLM management expressed its frustration in a lengthy statement reproduced hereunder:

KLM is in the worst crisis of its 101 years of existence. COVID-19 has undermined the good results of recent years. In order to secure the future of the company and its network for the Netherlands, the loan and government guarantees on bank loans totalling EUR 3.4 billion are crucial. KLM is very grateful to the Dutch government for its support and ability to provide financing at this time.

The government has set requirements for the granting of the aforementioned loan package. An important requirement in this respect is that all KLM employees must make a labour contribution during the term of the loan (expected until 2025). In recent months intensive negotiations have taken place with the trade unions in the three collective labour agreement domains (Cockpit, Ground and Cabin) about the fulfilment of the employment condition contribution of KLM employees, in accordance with the percentages and structure required by the government.

KLM cannot reach agreement on restructuration with the unions

The results of these negotiations have been laid down in ‘outline collective labour agreements’ and are included as such in the restructuring plan that KLM submitted on 1 October. These outline agreements give concrete form to this contribution until the beginning of 2022 (Cockpit) and the end of 2022 (Ground and Cabin).

In October, KLM and the trade unions worked on the main lines of these agreements in detailed agreements. At the same time, on behalf of the government, the Minister of Finance, with the help of a consultancy firm, is assessing the entire submitted by KLM restructuring plan. This evaluation should be completed by the end of October. Specifically in the area of employment conditions, the Minister emphasised to KLM that it should be more explicitly agreed and laid down that the contribution of all KLM employees should apply for the full duration of the loans.

Dutch government requires commitment clause by the trade unions to make the public aid of euro 3.4 billion available

In order to meet this requirement, without repeating the negotiations altogether, there is a ‘commitment clause’ which will be included in the agreements between KLM and the trade unions. In this clause, all unions must each commit themselves to continue to make the labour conditions contribution with all KLM employees in accordance with the requirement of the Ministry of Finance (whereby the exact details are up to KLM and the unions).

The management of KLM yesterday made an urgent appeal to the unions to agree to this. Today five trade unions CNV, De Unie, NVLT, VNC and VKP signed this clause. FNV (Cabin and Ground) is still considering the matter. The pilots’ union VNV has not signed this clause. This means that KLM does not meet the requirements set by the Minister. This outcome was communicated to the Minister.