Only the pilots union is still obstructive, the other unions agree to KLM’s austerity plan. But that does not mean KLM is there yet.
With an “outline” agreement with almost all unions on cutbacks, KLM has taken a step towards survival. An important step, but far from a decisive one. Because the future of the airline has certainly not looked brighter in recent times.
That agreement was necessary. Minister Hoekstra (finance) had set the condition for the billion-dollar support to KLM that a plan would be on the table by 1 October at the latest to cut costs by 15 percent, including personnel costs.
That plan is now in place, and in the end it was not the FNV that bothered, the union with the most members among the usually low-paid ground personnel, but the VNV pilots union, the representative of the high earners.
Too big a sacrifice
The FNV announced on Wednesday afternoon, the day before Hoekstra’s deadline, that it would not agree with the KLM plan, because it required too great a sacrifice from staff with a salary of up to one and a half times the average – while Hoekstra and the House of Representatives had demanded that this group would be spared.
But deep in the night – it was already October 1 – “things turned out to be possible that the KLM management had maintained to the very end that it was not possible,” says FNV negotiator Jan van den Brink. The lowest paid group still sees some of the profit sharing in 2019 and some will still receive a part of a previously promised salary increase.
The KLM management did not yet agree with the pilots. Hoekstra had prescribed that every KLM employee who earns three times the average or more must hand in 20 percent. KLM therefore wants to scrap a promised salary increase and profit sharing for pilots and convert the end-of-year bonus into extra days off – also to avoid layoffs. Pilot union VNV has so far refused to sign that plan. On Thursday afternoon, the two parties continue to talk.
One signature less
If necessary, KLM’s cost-cutting plan will be sent to Hoekstra with one less signature. One condition for government support has thus been met. At the end of August, the first aid amounts had already been transferred to KLM – 277 million as a loan from the state, 665 million in loans from banks guaranteed by the state – and to qualify for the next part of the total of 3.4 billion that plan had to be realized.
But KLM is far from there. At the beginning of August, the airline announced that it would cut 5,000 jobs in the coming period, and that will undoubtedly involve forced layoffs. So there must be a social plan for departing employees – for cabin crew this is currently in place, but not yet for ground crew.
And whether it will stay at a job loss of 5000 is very much the question. If things go worse in aviation than expected in August, more jobs will have to be lost, KLM CEO Pieter Elbers said in an interview with Het Financieele Dagblad a little over two weeks ago. Ten percent worse means 1500 extra jobs, he said, ten percent better means 1500 jobs will be retained. “If you look at what is happening now, the chance of worse is greater than the chance of better.”
The latter is evident, for example, from the winter timetable that KLM announced last week. Due to ever-new travel restrictions all over the world, KLM cannot “scale up” as intended, but rather shrinkage. Many KLM planes are only half full and in the meantime society is losing millions every day.
Real money, not a loan
So money needs to be added, said Ben Smith of Air France-KLM recently in an interview with a French newspaper. The € 10.4 billion in aid that the group has received from France and the Netherlands together, is enough for “less than twelve months”, he says. The group therefore wants to acquire additional capital with a share issue in May.
Minister Hoekstra has already said that there is talk with him about a capital injection. Until now, government support has consisted of loans, he told the NOS last week. “But there is certainly the possibility that real money, not a loan, must also be put into the company.”
By the way, a share of Air France-KLM now costs no more than about 2.90 euros – against 10 euros around the turn of the year. This means that the group on the stock exchange is now only worth a good 1.2 billion euros on paper.
Also read:
FNV rejects KLM austerity plans: “This puts state aid at risk”
KLM fears public opinion now that the airline company has not agreed with the unions on an austerity plan.
