KLM to receive €3.4 billion in state-backed financial aid

KLM Boeing 777 parked at Amsterdam Schiphol Airport. Photo: © jounigripen

KLM Royal Dutch Airlines has secured state-backed loans amounting €3.4 billion (US $3.8 billion) to overcome liquidity shortages caused by the Coronavirus crisis.

The airline of the Air France-KLM Group will receive a credit facility of €2.4 billion from eleven different banks, including three Dutch ones. This loan with a maturity of five years is supported by the Dutch government, which is guaranteeing 90 percent.

Furthermore, the government of the Netherlands is also providing a direct loan of €1 billion to KLM. This credit comes with the condition for the airline to improve its sustainability and competitiveness.

On behalf of all the employees at the Air France-KLM Group, I would like to thank the Dutch State and the financial institutions for their support to KLM in this unprecedented crisis for the airline industry.Benjamin Smith, CEO of Air France-KLM Group

In an investor release, KLM says the newly secured funding will be used to pay back an existing loan worth €665 million that was drawn in March this year for a first response to the Coronavirus pandemic. The company has also suspended dividend payments until the loans are fully paid back.

The financing package is necessary to secure the long and difficult road of recovery in the coming period […] we will be working on the restoration of the route network and, on the other hand, on the development of the restructuring plan and the far-reaching conditions that have been imposed on the package.Pieter Elbers, CEO of KLM

The package announced today is subject to approval by both the Dutch Parliament and the European Commission.

In May, sister airline Air France secured a €7 billion state-backed loan from the French government.