EU OKs €3.4B In Urgent Liquidity Support To KLM

The European Commission has approved, under EU State aid rules, a €3.4 billion (US$3.86 billion) Dutch aid measure consisting of a State guarantee on loans and a subordinated State loan to KLM to provide urgent liquidity to the company in the context of the coronavirus outbreak. The measures were approved under the State aid Temporary Framework adopted by the Commission on 19 March 19, 2020.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said, “KLM plays a key role for the Dutch economy in terms of employment and air connectivity. The crisis has hit the aviation sector particularly hard. This €3.4 billion State guarantee and State loan will provide KLM with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak. The Netherlands imposed certain conditions on the aid measure with respect to profit allocation, working conditions and sustainability. Very good. Member States are free to design measures in line with their policy objectives and EU rules.”

KLM is a major network airline operating in the Netherlands. It is part of the Air France-KLM group, in which the Dutch state holds a participation. KLM is the Netherlands’ second-largest private employer with over 36,600 employees. 

As a result of the imposition of travel restrictions introduced by the Netherlands and by many destination countries to limit the spread of the coronavirus, KLM has suffered a significant reduction of its services, which resulted in high operating losses.Since the gradual easing of restrictive measures, as of the beginning of June 2020, air passenger traffic is slowly recovering. KLM does not have sufficient liquidity in order to finance the ramp up of its activities. Therefore, the support from the Dutch State is essential to obtain vital liquidity to face this difficult period. T

The Netherlands notified the Commission, under EU State aid rules, an aid measure to KLM to enable the company to mitigate the negative consequences of the coronavirus outbreak. The measure, which has a total budget of €3.4 billion, will take the form of: (i) a State guarantee on loans provided by a consortium of banks, and (ii) a subordinated loan to the company by the Dutch State.

Full Content: Europa

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