June 25, 2020 / 4:40 PM / 16 days ago

Exclusive: France, Netherlands close to deal on KLM bailout - sources

AMSTERDAM/PARIS (Reuters) - France and the Netherlands are close to an agreement on a Dutch Air France-KLM bailout contribution, three sources with knowledge of the matter told Reuters on Thursday.

FILE PHOTO: Logo of Air France KLM Group is pictured on the first Air France airliner's Airbus A350 at the headquarters of Airbus in Colomiers near Toulouse, France, September 27, 2019. REUTERS/Regis Duvignau/File Photo

Under the deal, which could be announced on Thursday evening or Friday morning, the Dutch government would unblock close to 4 billion euros ($4.5 billion) in guaranteed and direct loans to KLM and appoint a trustee to its board, they said.

The airline group and a French finance ministry spokesman declined to comment. Dutch government officials did not immediately respond to requests for comment.

The governments, which each own about 14% of Air France-KLM, unveiled 7 billion euros in French aid in April and a planned 2-4 billion from the Netherlands as the coronavirus crisis brought air travel to a near-halt.

But the Dutch funds have been delayed by parliamentary scrutiny and tense negotiations in which France rebuffed The Hague’s push for a state KLM board appointee that would weaken the group’s hold on its Dutch subsidiary.

Instead, the agreement to be announced would see the appointment of a non-voting trustee to ensure that bailout money from Dutch taxpayers goes to support the company’s Dutch operations, the sources said.

The French and Dutch governments remain at loggerheads over management and strategy at Air France-KLM, created by the 2004 merger between the two national carriers.

Frustrations exploded in March last year with the Dutch state’s surprise acquisition of a stake in the group, designed to match France’s holding and counter its clout.

The KLM aid package is also likely to come with environmental conditions and restrictions on executive pay demanded by Dutch lawmakers.

($1 = 0.8916 euros)

Reporting by Toby Sterling and Laurence Frost; additional reporting by Anthony Deutsch; Editing by Edmund Blair, Kirsten Donovan

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