De Unie, in your interest

Your collective labor agreement and industry

Support measures: KLM employees pay the bill

June 26, 2020

After two months of nail-biting, the time has come: this morning the government support measures were announced. We are happy that there is now money to continue paying the bills and salaries. But: a first reading shows that the price will have to be paid in full by KLM employees. We find that offensive. Our chairman, Reinier Castelein, gave a first detailed response about this in the RTL Z news broadcast of 10 o'clock. For a summary of that response, see the 11 o'clock broadcast.

Aid measures are substantial commercial loans

Eleven banks lend EUR 2,4 billion to KLM. KLM pays a commercial interest rate for this. The amount of that rate has not been disclosed, but the banks will undoubtedly have demanded the same rates as the government receives. These loans are completely risk-free for the banks, because the government guarantees 90 percent. Does KLM not repay the loans? Then the government pays 2,16 billion to the bank. KLM has to pay a premium of 1,42 percent for this government guarantee over six years. In six years' time, this will amount to nearly 205 million euros in premiums for the government.

The state is lending EUR 1 billion as a credit facility to KLM. For this, KLM has to pay an average of 6 percent interest on top of the Euribor over 7,17 years. This Euribor is currently slightly negative. This brings the total interest to the government over 6 years to about 420 million euros. The government thus receives an amount of 625 million euros on the basis of these loans and guarantees.

If the eleven banks have been given the same commercial conditions as the government, KLM will have to pay them about 6 billion euros in interest in 1 years. This is on top of the € 3,4 billion that KLM will now receive to avert bankruptcy. For example, it will eventually pay back 6 billion in 5 years. That equates to an average of 7,84 percent interest per year! The banks therefore run virtually no risk.

All in all: this is more an investment than a loan, and certainly not a gift.

Intervention in terms of employment

The question arises: who will pay for all this? The answer is simple: the KLM employees. This is because the condition imposed on KLM is that it must yield an average of about 10 percent in terms of employment conditions. All KLM employees who earn from an average income have to hand in. An average income in the Netherlands in 2020 is € 36.500 including holiday pay. That is about € 2.600 gross per month at KLM if you have a full-time employment contract.

If we look at the ground collective labor agreement, this affects just about everyone from A06, T26 and all MSG colleagues. KLM employees who earn twice the average earn 10 percent; at three times the average as much as 20 percent. For every factor of 0,1 that you are above average, 1 percent of the total employment conditions must be surrendered. This can therefore also include holidays, year-end bonus, shift work allowance and other employment conditions.

If you assume an overall cutback of the terms of employment of 10 percent, then employees have to hand in 300 million annually. This will be 1,8 billion euros over six years. In short: the interest and premiums must be paid by KLM employees. Unprecedented for a conservative liberal cabinet that not long ago advocated significant increases in wages.

Government: stay 1,5 meters away from our collective labor agreement!

What state guarantee has now been issued for KLM employees? The only guarantee is that they are certain that an average of about 10 percent in terms of employment has to be surrendered. Is there a guarantee of job retention in return? NO! Chances are that a large number of colleagues will also have to leave the gate. They will also have to deal with a 10 percent lower unemployment benefit if you earn less than 1,5 times the average.

De Unie has been clear about the difficult situation in aviation – and at KLM specifically – from the start. We will most likely not escape compulsory redundancies. Trade unions, employee participation and KLM will discuss this with each other. As always, we will adopt a constructive and proactive attitude in these negotiating talks. But we are then at the wheel and not the government. It is shocking that there is now such a clear link between the commercial loans and the surrender of employment conditions. We therefore emphatically say that we are prepared to take the necessary steps to ensure the continued existence of KLM.

We continue to fight for the interests of KLM employees. We will continue to fight for a proportional distribution of the costs of KLM's continued existence. Because not only 35.000 KLM employees are dependent on this, 90.000 other employees and their families from the Schiphol region are also dependent on KLM's continued existence. A more fundamental point is: we will continue to oppose government interference with our collective labor agreement. We therefore call on them to keep 1,5 meters away from our collective labor agreement!

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