Flawed Aid: The Dutch Support Package for KLM

A review for the Dutch government's support for KLM during COVID-19 found it successful in maintaining airline operations but flawed due to risk reduction for banks and lack of compliance enforcement. KLM received 3.4 billion euros in loan guarantees with cost-cutting conditions, which were eventually discarded after 2022.

A Dutch government review scrutinized the support package for KLM during the COVID-19 pandemic, concluding its flaws despite achieving its primary objective of keeping the airline operational. The package, however, undesirably reduced banks' risk exposure.

KLM, the Dutch subsidiary of Air France-KLM, received loan guarantees worth 3.4 billion euros but relied more significantly on a government furlough wage program. Ernst & Young's critical report emphasized the risk structure favoring banks and noted the abandonment of KLM's cost-cutting conditions post-2022.

The review found concessions were primarily imposed on employees, while financiers, suppliers, and shareholders largely avoided similar demands.