The European Commission Monday gave its green light to the Netherlands’ plans to bail out its flag carrier KLM.
The Hague will provide €2.4 billion in state guaranteed loans, and a €1 billion direct loan from the government payable after five years, to help the Dutch airline get through the COVID-19 crisis.
EU’s competition czar Margrethe Vestager said in a press release that the package “will provide KLM with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak.”
As part of the rescue deal, KLM committed a 15 percent reduction in costs, with layoffs still to be negotiated. Other conditions include banning bonuses and dividends for the duration of the loan, a reduction in night flights and a commitment to make the airline more fuel efficient.
The Commission welcomed the strings attached to the bailout, inviting other EU countries to repeat this initiative: “Member States are free to design measures in line with their policy objectives and EU rules,” she added.
The European Commission in May cleared the French government’s €7 billion rescue package for Air France to keep the company afloat during the pandemic. The French bailout was made up of €4 billion of state-guaranteed loans provided by banks and €3 billion of direct loans from the state, and also came with strings attached.
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