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Dutch government halts KLM bailout amid disagreement over cost cuts

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In this file photo dated Monday April 19, 2010, The first of three KLM passenger planes heading to New York takes off from Schiphol airport in Amsterdam, Netherlands.
In this file photo dated Monday April 19, 2010, The first of three KLM passenger planes heading to New York takes off from Schiphol airport in Amsterdam, Netherlands.   -   Copyright  AP Photo/Peter Dejong, FILE
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The Dutch government will halt a coronavirus bailout to airline KLM amid a disagreement over cost cuts and pilot's pay, the Dutch finance minister said in a statement.

The national carrier is meant to receive a €3.4 billion bailout from the Dutch government due to losses sustained during the pandemic.

But KLM needs to cut more costs as part of its restructuring plan given to the government on October 1, the Dutch finance minister said.

"Without this loan, KLM will not get through this difficult time," Pieter Elbers, KLM CEO, said in a statement. The company said on Friday that in its third quarter it recorded a loss of €234 million.

The Dutch government says the company needs to cut costs by 15% and improve sustainability.

"Experts disagree on the pace at which the airline will recover, but agree that the recovery will continue for years to come and will be slower than previously expected," the Dutch finance minister Wopke Hoekstra and infrastructure minister Cora van Nieuwenhuizen said in a joint letter.

They said in the letter that they wanted commitments on pay from unions through the duration of the loan, not just until 2022.

The pilot's union said in a statement that members already had agreed to a 20% pay cut and that they are committed to “continue taking responsibility to get KLM through the crisis and make it a healthy company again.”

It said KLM sought the extra commitment at the last minute and it “was not achievable in this timeframe.”