Dutch reject KLM cost-cutting plan linked to $4 billion bailout

Bloomberg

The Netherlands has rejected a cost-cutting plan put forth by Air France-KLM’s Dutch arm and withheld a portion of a $4 billion government bailout until it approves the restructuring plan.
The Dutch government won’t grant a second tranche of state aid because pilot union VNV rejected a pay cut, Finance Minister Wopke Hoekstra and Infrastructure and Water Management Minister Cora van Nieuwenhuizen wrote in a letter to parliament. “It’s up to KLM and the unions to ensure that the required conditions will be met,” they said.
The Dutch government had linked the funds to KLM taking steps to improve profitability and competitiveness, including through wage cuts. All unions accepted a pay cut except for the pilot union, KLM stated.
The decision sends KLM back to the drawing board if it wants to receive more cash from the package of loans and guarantees. It also comes at a sensitive time for Air France-KLM as a whole, whose two biggest shareholders, France and the Netherlands, are preparing for critical talks on further bolstering the airline’s weakened finances.
The Dutch finance minister has pushed for cuts in KLM’s structural costs, which he deemed too high even before the health crisis erupted. The French have been faster in getting Air France a 7 billion-euro rescue package that also came with some strings.