State aid for KLM should not be based on false sentiment

It has therefore become a total of 3.4 billion euros in government money for KLM. An amount that is barely noticeable between the tens of billions in aid amounts that have been allocated since March as a result of the corona crisis to keep people and companies afloat. The lion’s share (2.4 billion) of the aid to KLM consists of a guarantee scheme for private lending, the remaining billion is a subordinated loan that will be paid in installments.

This should not only lead KLM, which has long since ceased to be self-employed, to be guided by the liquidity crisis caused by the global corona outbreak, but must also show the company more strongly, the cabinet says. As a major shareholder, the Netherlands has long advocated restructuring the company. Corona is an extra reason for this, as can be seen from the letter that ministers Wopke Hoekstra (Finance, CDA) and Cora van Nieuwenhuizen (Infrastructure and Water Management, VVD) have written to the House of Representatives.

The € 3.4 billion that is now being made available offers the state the opportunity to impose additional conditions. The question is how hard and realistic these are. All the more when it is considered that national governments around the world are supported by national governments and that the competitive advantage of Dutch aid is therefore relative. But it also shows that the cabinet hardly had a choice. Doing nothing is not an option in this fighting market.

Schiphol and thus the Dutch economy are interwoven with KLM in such a way that the free market model cannot fully apply here. It is not without reason that the Dutch government is a shareholder. That has much less to do with KLM than with Schiphol as the home base of the company. Schiphol simply has its crucial function in the economic structure of the Netherlands. That is, still. The world is not standing still here either, and care must be taken to ensure that the special significance of KLM is elevated to dogma

But support for KLM is inevitable at the moment, although it remains a difficult story. It is paradoxical to want to pursue a stringent and radical climate policy and at the same time support one of the major polluters. That is why the government has made a sensible decision to give sustainability a role in the conditions, although the cautious tone is striking again. After all, the ‘requirement’ for KLM to ‘commit’ to existing (international) agreements to limit emissions and to reduce noise pollution is nothing else than the task to comply with the rules already made.

The condition for major intervention on the cost side is understandable. Waiving dividends and bonuses makes sense for a company on the drip. But that it is also decreed that employees who earn at least three times an average income must surrender at least 20 percent of their salary is beyond the powers of the state. It is up to KLM’s management to determine how the imposed cost reduction is achieved.

Many still speak of KLM as ‘our national pride’. Still, pride, not rational sentiment, should guide rational interest in helping the company. Such interest has its limits. This even applies to KLM.

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