Dhaka: Air France-KLM will receive up to USD 12 billion (EUR 11 billion) in financial aid from the French and Dutch government as the coronavirus pandemic brings many airlines on the verge of bankruptcy.
The Dutch government said on April 24 that it would provide between USD 2.17 billion and USD 4.34 billion in state aid to KLM, while the French cabinet announced a support package of USD 7.6 billion for Air France.
The deal, which has yet to be approved by competition authorities, includes conditions in return for the handout. KLM will not be able to pay dividends or award bonuses for as long as it receives state support and workers will have to take a pay cut, according to a statement.
The airline will also have to adopt a greener approach, for example, by cutting back the number of night flights.
The deal comes at a time when the airline industry is facing an unprecedented challenge, with international travel brought to a near standstill as a result of a global health crisis caused by the coronavirus outbreak. The International Air Transport Association (IATA) said last week that the potential revenue loss by European airlines this year could be as high as USD 89 billion.
The IATA also estimated that passenger demand could be 55 per cent below 2019 levels and around 6.7 million jobs were thought to be at risk.