The future of Air France-KLM in doubt without cost reduction – Dutch Minister

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AMSTERDAM (Reuters) – Air France-KLM AIRF.PA may not survive the current crisis if the airline cannot cut costs, Dutch Finance Minister Wopke Hoekstra said on Sunday.

FILE PHOTO: Passengers wait at the Air France counter at Nice International Airport, France, February 20, 2020. REUTERS / Eric Gaillard

“The survival of Air France-KLM is not certain,” Hoekstra said in an interview with Dutch public television.

“They will have to address their cost base even as it is now. And suppose this situation lasts until the end of next year, then they’ll have to cut even deeper.

The immediate future of Air France-KLM was secured by the French and Dutch governments in July, as they provided a total of 10.4 billion euros ($ 12.3 billion) in rescue loans and in guarantees to help the group survive the disastrous effects of the COVID-19 pandemic on air travel.

In return for this support, the Dutch subsidiary KLM announced it would cut 1,500 more jobs, reducing its staff by 20%, while a salary hike agreed for 2020 has been frozen by the company.

The French subsidiary Air France plans to cut 6,500 jobs, or 16% of its workforce, until 2022.

So far, however, KLM has failed to reach an agreement with the unions on the cuts needed to meet the demands set by the Dutch government.

Hoekstra said deep restructuring would be needed for governments to consider additional support.

“KLM will always be very important for the Dutch economy. But the question is whether that will be enough, ”he said.

Air France-KLM said last month it was losing 10 million euros a day due to the coronavirus crisis.

Reporting by Bart Meijer; Edited by Susan Fenton

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