KLM repays remainder of loan to Dutch government
KLM Royal Dutch Airlines will be repaying the final portion of €277 million of the loans secured from the Dutch government and the banks in 2020. KLM borrowed a total of €942 million from the credit facility of €3.4 billion. This repayment means that two years on, KLM will have redeemed all the portions it used of the loan package received to deal with the Covid-19 crisis and to safeguard its future.
Various factors including the departure of 6,000 KLM staff members, a sharp reduction in costs, the removal of travel restrictions and the rising demand for airline tickets made it possible for KLM to make two repayments earlier this year against the total loan amount of €942 million.
In three steps, the total amount has now been redeemed. KLM paid €311 million to the banks on 3 May and another €354 million on 3 June, paying off the entire sum in bank loans of €665 million. By now repaying the remaining €277 million, KLM has also redeemed the portion of the loan issued by the Dutch government.
KLM is incredibly grateful to the Dutch government and the banks for their support during the pandemic. By repaying its loans as quickly as possible, KLM shows that it takes its responsibilities seriously and that it keeps its promises to its financial stakeholders, government and society.
“KLM colleagues battled their way through the COVID19-crisis in 2020 and 2021. The current operational situation at Schiphol is also demanding and again asks a great deal of our people and our customers. I’d like to sincerely thank everyone at KLM for their huge efforts. This last repayment is therefore also a welcome crowning result of everyone’s efforts so far and serves as encouragement for the entire KLM workforce in facing these difficult times." Pieter Elbers – President & CEO KLM Royal Dutch Airlines
“I’m pleased with this important step taken by KLM. Moving forward, I can and will build upon this to achieve even better financial health for KLM in the future." Marjan Rintel - Upcoming KLM President & CEO
Despite the airline industry’s recent recovery, the near future remains uncertain due to such factors as the high rate of inflation, rising costs, the constant presence of Covid-19 around the world and geopolitical volatilities such as the war in Ukraine. As a result, KLM has decided to retain access to future credit. After the loan repayment, KLM will continue to have a credit facility of €2.4 billion (€723 million government loan and €1.735 billion from the banks) at its disposal, allowing it to make use of the existing financing options. At the same time, current forecasts show that KLM has sufficient financial resources available for the years ahead.
KLM has emphasised the importance of keeping a tight rein on costs in the next period to ensure financial stability in the future. A reduction in costs is one of the main conditions attached to the loans by the Dutch government. These conditions will remain in place for the entire KLM Group until such time as the loan and guarantee have been terminated.