KLM secures loans of €3.4 billion to help overcome the crisis and prepare for the future

Roissy, 26 June 2020

KLM secures loans of €3.4 billion to help overcome the crisis and prepare for the future

On 25 June 2020, the Air France-KLM Group Board of Directors approved a financial support package backed by the Dutch State for KLM in the amount of €3.4 billion. These loans will enable KLM to weather the current COVID-19 crisis and prepare for the future.

The Dutch state aid to KLM comes in addition to the €7 billion in funding granted by the French State to Air France announced on 7 May 2020.

Following discussions with the Dutch State and several Dutch and international banking institutions, the Air France-KLM Group and KLM were able to finalize the various components of a financial support package.

This financing includes two loans for KLM and its subsidiaries:

• A revolving credit facility of €2.4 billion, granted by 11 banks, of which three are Dutch banks and eight are international banks. The main elements include:
  • 90% guarantee supported by the Dutch State
  • Maturity of 5 years
  • Coupon at an annual rate equal to EURIBOR (floored at zero) plus a margin of 1.35%
  • A cost of guarantee granted by the Dutch state equal to 0.50% in year 1, 1.00% in year 2 and 3, and 2.00% after year 3
• A direct loan of €1 billion, granted by the Dutch State to KLM, with the following main elements:
  • Term loan of €1 billion
  • Maturity of 5.5 years
  • Coupon payable annually at a rate equal to EURIBOR 12 months (floored at zero) plus a margin of 6.25% for year 1, 6.75% for year 2 and 3, and 7.75% for year 4 and 5
  • Subordination to the new revolving credit facility

Both the revolving credit facility and the direct loan will be drawn on a pro rata basis. Further drawings subsequent to the first drawing are subject to certain conditions being fulfilled by KLM. KLM’s first drawing under the new revolving credit facility will be used to repay and terminate the existing revolving credit facility drawn on 19 March 2020 for an amount of €665 million.

Conditions associated with the direct state loan are linked to the airline becoming more sustainable as well as the restored performance and competitiveness of KLM, including a comprehensive restructuring plan and contributions made by employees.

KLM has undertaken to suspend dividend payments to its shareholders until these two loans have been repaid in full.

This state aid, which remains subject to approval by the European Commission and the Dutch Parliament, will provide KLM with the necessary means to meet its obligations and adapt in a sector that the global crisis will severely disrupt.