An Amsterdam court has ruled that Dutch airline KLM is under no obligation to plug a funding gap at its pension fund for pilots that would allow the scheme to grant full indexation.
In summary proceedings brought by union VNV, the court decided that KLM’s expected additional contribution – estimated at €600m by the airline – was large enough for the company to cancel its agreement to meet a funding shortfall.
The court also ruled that the agreement, terminated unilaterally by KLM, had not been covered by a binding collective labour agreement (CAO) between the employer and the pilots union.
KLM had argued that it would have had to pay €600m by the end of this year as a consequence of the new financial assessment framework (nFTK), which increased the required funding level for full indexation from 105% to 122%.
It said it could not afford to pay the additional premium, which the union estimated at €115m.
The court said KLM and the union could not have foreseen the financial effects of the nFTK when the pilot-scheme agreement was made in 2007.
It also ruled that the four-month notice given by KLM had been sufficiently large, adding that VNV could have seen it coming.
The court pointed out that planning for the nFTK had already begun in 2012, from which point the airline requested a new, more sustainable agreement.
It did not, however, address the VNV’s argument that the pension fund reimbursed KLM €250m in the past.
The union said it was now weighing its legal options.
The €8.2bn Pensioenfonds Vliegend Personeel KLM, which also recently announced “legal steps” against the airline, declined to comment on its position.
Last week, it said it would focus its case on KLM’s unilateral decision to cancel its contract for pension provision with the pension fund.
It previously claimed that KLM lacked an important reason for terminating the contract and that the employer had given too short notice.
It also argued that a premium reduction for KLM – agreed two years ago – could not be reconciled with the company’s decision to cancel its agreement.