Airline KLM has not adhered to the conditions of the support package it received from the government to survive the corona crisis. State agent Jeroen Kremers states this in his final report, in which he also suggests enforcing compliance through the courts. Promised cost savings have not been realized and, contrary to agreements, the staff received a profit distribution in 2022.
Moreover, the more expensive personnel, such as the pilots, paid much less salary than agreed when the support package was awarded to save KLM from collapse, says Kremers. “Taking into account the higher inflation, the employment-conditional contribution of pilots in 2022 lagged far behind (in the order of 15 percent) compared to the commitments entered into by KLM to obtain the billion-dollar support. The agreed contribution has been made by the low-paid ground and cabin employees and the board and top management.”
Kremers has been appointed on behalf of the government to monitor compliance with the conditions. He previously held management positions and supervisory directorships at ABN Amro, NIBC and Robeco, among others. He previously held senior positions at the Ministry of Finance and represented the Netherlands at the IMF. On Wednesday, he presented his fifth and final report on the billion-dollar support, which has since been repaid.
He not only criticizes the financial compliance with the conditions, but also the information provided by the airline. “The provision of information and the cooperation of KLM management went well until the conditions became tight. Contrary to what had been agreed, the state agent and the State were then no longer informed in a timely and reliable manner. Violations only came to light later or after investigation by external parties. KLM’s Annual Report 2022 misrepresents the facts regarding compliance with the conditions of the support package.”
Disappointed
In a letter to Parliament, the cabinet says it is ‘disappointed’ in KLM. The cabinet also ‘regrets’ that KLM has delivered an ‘incomplete implementation plan’. As a result, the state agent was unable to properly assess compliance with the conditions, the cabinet writes.
According to Kremers, KLM undermines the authority of the government with its attitude. In his final report, the state agent suggests legal action to enforce compliance with the support conditions. He also thinks that KLM, just like Booking.com before, should consider repaying part of the NOW benefit received. According to him, that part of the support was ‘formally justified but socially unjustified’.
According to him, the cabinet has spoken ‘insistently’ with KLM on several occasions to insist on compliance with the support conditions. “Despite repeated commitments from KLM, those talks have so far not led to compliance. On the contrary. Insofar as conducting talks does not lead to the desired results, the government also has other, more coercive means at its disposal.”
The government states that the number of possibilities for the state to enforce compliance is more limited than outlined. The support to KLM will be evaluated in the near future. The results of this evaluation will be published in the autumn of 2023.
This report is a mixture of opinions and facts
KLM
KLM says in a response that it read the final report of the state agent ‘with surprise’. According to the airline, it is a mixture of opinions and facts. “Whoever reads the final report of the state agent might think that KLM has not taken any notice of the State’s conditions. However, that is by no means the case.”
KLM points to ‘economic conditions and tightness on the labor market’ that led to ‘new dilemmas’. They forced KLM to make difficult choices, the company writes. ‘They worked out well. Government support has been effective and KLM has successfully weathered the crisis. The traveler can fully rely on us, the network has been maintained and the loans have been repaid faster than expected. KLM has always reported correctly, factually and carefully, including in the annual report, and has included the relevant ministries in its considerations.’
It hurts society that the state agent aims his arrows at ‘our fliers’. ‘That’s not right. We stand for all KLM employees, make agreements with the unions about conditions and therefore distance ourselves from the remarks of the state agent in the report.’
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