AMSTERDAM (Reuters) -A review for the Dutch government on a support package given to airline KLM during the COVID-19 pandemic concluded it was flawed because it reduced the risk borne by banks, even though it succeeded in its primary goal of keeping the airline operating.
The review also highlighted “the lack of a sufficient mechanism to force adherence” to the conditions of the package.
KLM, the Dutch arm of Air France-KLM, received loan guarantees worth 3.4 billion euros to remain afloat during the pandemic, although in the end a government program providing pay for furloughed workers was more financially significant.
Key points of criticism in the report conducted by Ernst & Young were that the structure of the Dutch support package reduced risk for banks, and that KLM cost-cutting plans that had been one condition of the aid were abandoned after 2022.
It found that while concessions were imposed on employees, other interested parties such as financiers, suppliers and shareholders, largely avoided them.
KLM endorses the general conclusion of the report, stating that state support has been effective enough, KLM told Reuters.
“KLM repaid the loan, much faster than expected – in June 2022 – including the interest of 80 million,” the company added.
(Reporting by Alban Kacher, Toby Sterling; Additional reporting Joanna PlucinskaEditing by Alexandra Hudson and Hugh Lawson)
