The European Commission has approved a bailout package of €3.4 billion ($3.84 billion) to Dutch airline KLM to provide urgent liquidity to the company in the context of the coronavirus outbreak.

The measures were approved under the State aid Temporary Framework adopted by the Commission on March 19, 2020. The aid measure will take the form of a State guarantee on loans provided by a consortium of banks and a subordinated loan to the company by the Dutch State.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “KLM plays a key role for the Dutch economy in terms of employment and air connectivity. The crisis has hit the aviation sector particularly hard.

“This €3.4 billion State guarantee and State loan will provide KLM with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak. The Netherlands imposed certain conditions on the aid measure with respect to profit allocation, working conditions and sustainability. Very good. Member States are free to design measures in line with their policy objectives and EU rules.”

KLM is part of the Air France-KLM group, in which the Dutch state holds a participation. KLM is the Netherlands' second-largest private employer with over 36,600 employees. Since the start of the coronavirus outbreak, KLM has also played an essential role in the repatriation of citizens and for the transport of medical equipment.

As a result of the imposition of travel restrictions introduced by the Netherlands and by many destination countries to limit the spread of the coronavirus, KLM has suffered a significant reduction of its services, which resulted in high operating losses, a European Commission statement said. – TradeArabia News Service