Pilot union VNV and Dutch airline KLM are at loggerheads after the latter unilaterally cancelled an agreement to grant full pensions indexation by covering any funding shortfalls.

The airline argued at the Amsterdam court that, under the Netherlands’ new financial assessment framework (nFTK), it would have to come up with an additional €600m.

It said this would jeopardise the very existence of the business, as its cash reserves would drop to just €500m.

Jaap van Slooten, KLM’s lawyer, described the VNV’s approach as “reckless” and warned that any future disaster, such as a volcano eruption, could trigger redundancies and the cancellation of new plane orders.

The VNV, however – citing estimates produced by the €8.2bn pension fund for pilots – claimed the airline would need to set aside no more than €115m by the end of this year.

It accused KLM of exaggerating and said the company should have waited to see how much its additional contribution would have been, or whether the pension fund would have forced KLM to pay up.

The Pensioenfonds Vliegend Personeel previously argued that KLM lacked an important reason to cancel the agreement.

During the summary proceedings, KLM’s lawyer said the airline had been generous on pensions, having granted 10% additional indexation on top of the salary index since 2000, as well as monthly pension benefits of €10,000 on average.

According to the judge hearing the case, however, the key question is whether the additional contribution falls under the collective-labour agreement (CAO) between KLM and the union.

The current CAO also applies to next year and cannot be cancelled unilaterally.

Because the VNV rejected the magistrate’s call for fresh negotiations, the judge will reach a verdict on the case on 27 September.