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Why the government will not let KLM go bankrupt: Utrecht University professor answers

Last updated 6 months ago by Michael Darmanin

The corona crisis has changed our world radically. From small to big, all players are affected. Giant corporations which seemed untouchable are now crumbling. This is also the case for the famous KLM, the oldest active airline in the world. Dr. Bram Bouwens, a historian at Utrecht University discussed the past, present, and future of the company.

KLM: more than a company

Dr. Bouwens explains that KLM has been around for 101 years. This allowed it to build a prestigious image. And with prestige come devoted employees. Last year, when KLM’s CEO was heavily criticized for the Air France and KLM discussion, employees organized demonstration in support of their leader. This suggests that letting KLM fall, would mean letting a whole culture vanish.

The crown, the economy, and the politics

The Dutch government kept pumping billions of euros in the company since the beginning of the corona crisis. It is unlikely that they would have done this without a good reason. And that reason exists. Dr. Bouwens reminds us that although struggling now, KLM nonetheless creates a lot of jobs both directly and indirectly. Political reasons motivate the decision as well: there is a certain pride in having a national airline.

No free money

The government’s help comes at a cost. The aid received by KLM in June came with several caveats such as cutting the costs by 15%, cutting 7000 night flights, and committing to cut the CO2 emissions until 2030 by 50 percent per passenger.

KLM responded and submitted their restructuring plan to the Ministry of Finance. The company mentions that it successfully closed deals with all the relevant worker unions. Demonstrating the dedication of its employees. Some measures included in the plan are: giving up on renewing 1500 short-term contracts, having 2000 employees joining a voluntary resignation scheme, ceasing the use of leased aircraft, and building a more efficient fleet. Many other measures were taken as well. So for now, the future seems promising.

Silviu Alexandru Costea
Silviu Alexandru Costea
Silviu A. Costea is a psychology student with a deep appreciation for beauty, may it be in art, science, nature, or anywhere else. With his passion for writing and experience as an international student, he is dedicated to providing quality content on various topics. He is a keen listener and he is convinced that everyone has a story worth sharing.


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