In addition, Smith will receive a bonus of 768,456 euros in addition to his fixed salary of nine tons last year.
Although Air France-KLM must reverse every dime to survive the corona crisis, shareholders voted for its variable pay, which was the year before the corona crisis, when the company made more sales, but made less profit.
The Netherlands stands alone
The Dutch and French states hold 28.3 percent of the company’s shares, of which 14 percent are owned by the Netherlands. Minister Wopke Hoekstra (Finance, CDA) earlier this afternoon hinted at RTL Z that he had voted against the bonus. That didn’t help much: 81.01 percent ultimately voted in favor, including the French state.
The same was true for Smith’s long-term bonus, which is partly paid out in shares and can thus amount to a maximum of 2 million euros. Thanks to an overwhelming majority of the votes – and despite Dutch resistance – the Canadian top man also kept this bonus for the coming years. In total, Smith earned a total of 4 million euros in 2019.
“Not the time for bonuses”
“As we have always said: we are in a crisis and a lot of tax money is needed to guide companies and employees through this crisis,” said Hoekstra in an initial reaction. “This is therefore not the time for bonuses for company directors that we should support,” said the minister.
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On April 23, it became clear that Smith was renouncing his expected bonus for this year and a quarter of his salary, albeit under great pressure. KLM boss Pieter Elbers hands in 20 percent of salary.
‘Free fall’
Air France-KLM was soon in financial distress after international air traffic was shut down to contain the pandemic. According to financial director Frédéric Gagey, the company fell into “free fall” in March.
The company’s number of flights declined by approximately 90 percent, Smith emphasized again during his presentation. He called the continuing of freight transport crucial for the survival of the company.
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Equity evaporates
The aviation combination suffered a net loss of EUR 1.8 billion in the past quarter, it showed earlier this month. At KLM it was an operational loss of 275 million, with Air France at 536 million euros. Apart from just under 1 billion euros in ongoing costs.
The figures were disastrous: at the end of March, the company’s equity had evaporated from 2.3 billion to 185 million euros. In the second quarter, the company will almost certainly face an even greater financial blow.
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Double state aid
On May 4, the European Commission agreed to EUR 7 billion in state aid from the French government. That aid consists of a loan and state guarantees on other loans, to prevent the group from going bankrupt due to the abrupt cessation of its activities, which would also hit the French economy.
No definitive agreement has yet been reached on Dutch aid. The government wants to support KLM with a package worth 2 to 4 billion euros, but this is not yet a financing agreement with banks. This extra capital injection also requires permission from the European supervisor.
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