KLM’s pilots union agreed to extend their wage freeze to 2025. This finally secured the airline’s much needed government bailout. This will come as a relief to management, who had previously stated that the airline would not survive without it.
Unions for ground and cabin crew had already agreed to the extension. Originally, the pilot’s union (VNV) had agreed to a wage freeze until 2022. The other unions had an agreement to 2023. The Netherlands government made the request for an extension relatively late. The reason was the progress of the second wave of the Covid-19 pandemic, which pushed back predictions for the aviation industry’s recovery.
The bailout amounts to 3.4 billion euros. The wage freeze is part of plans for an overall cost reduction of 15% for KLM, to boost its competitiveness in this crisis. The airline had already announced the retirement of its last two 747 aircraft earlier this year. They brought back the Jumbos, however, to work as freighters for personal protective equipment. They were finally retired this past weekend.
Wage Freeze Resolution
Originally (last Friday), Dutch Finance Minister Wopke Hoekstra had given the unions until Saturday to agree to the wage freeze extension. That wasn’t possible, and what followed was an “incredibly intensive” weekend, as KLM chief executive Pieter Elbers put it. He now announced that the airline and the unions came to a conclusion.
“The past few days have been incredibly intensive for everyone, with great pressure on the company, negative impact on reputation and internal divisions. But in the end we, as KLM and unions, came to an agreement”, Mr. Elbers said. KLM has approximately 30,000 employees.
The wage freeze and bailout deal comes at a sensitive time financially. The Air France-KLM group announced their third-quarter financial results last week. They amounted to a 67% drop in third-quarter revenue and a € 1.05 billion quarterly operating loss.
The airline group have plans to strengthen their finances through a recapitalization. This will require further talks with the French and Dutch governments, so the resolution of this issue will be a relief. Air France-KLM’s shares in Paris traded 1.6% higher on Wednesday, following the announcement that the Dutch bailout will proceed.