The European Commission has approved EUR3.4 billion euro (USD3.9 billion) in financial support from the Dutch government to KLM Royal Dutch Airlines (KL, Amsterdam Schiphol).

"This EUR3.4 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," Commission Executive Vice-President Margrethe Vestager said.

KLM's bailout consists of a EUR1 billion direct state loan, disbursed in tranches through 2025, and up to EUR2.4 billion in additional state-backed commercial loans. The maximum duration of the guarantee covering up to 90% of the loans is six years.

The Dutch government required KLM to implement pay 10-20% salary cuts to higher earning staff in return for the bailout. The measure has been opposed by unions.

The Dutch state owns a 14.3% stake in Air France-KLM.

The bailout complements an earlier EUR7 billion (USD8 billion) extended to sister airline Air France (AF, Paris CDG) by the French government.