Dividends and Dutch bailout of KLM on hold as pilots reject wage freeze

In Europe the airlines often have direct government support or ownership, in the case of KLM-Air France two countries own the airlines. When times are good it is easy to share ownership, when times are tough such as the COVID situation, it is not easy. Both governments want their airlines to continue and have spin off jobs at the airports and economic development. In Europe, many industries have unions and stronger unions which the government either supports or does not oppose. However, in economics in order to stay in business, someone should make money or at least try to keep costs low.

In the KLM case it is the government who is management, and Dutch Finance Minister Wopke Hockstra said he was disappointed with the pilot union who rejected a wage freeze until 2025. The union said it has agreed to a wage freeze until March 2022 and would not extend it. The government had been stressing that KLM would receive a bailout of E 3.4 billion ($5.2 billion), if the pilots agreed as the other unions of ground and cabin crews (who make less money) had agreed to the extension in exchange for no loss of jobs.

According to a report in Reuters, KLM-Air France reported a drop of 67% in third quarter revenue to E 2.52 billion. The airline’s debt has risen by E 3 billion to E 9 billion.

Linking to dividend paying stocks, in all companies while everyone has the same end interest not everyone has the same vested interest. Some groups have more control than others and when you invest you need to know who the players are to know which groups have a say and which groups raise concerns which only need to be listened to.

There are more questions than answers, till the next time – to raising questions.

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