The Hague, Netherlands | AFP | Dutch national carrier KLM said Monday it has reached agreement with its pilots in a long-running dispute over changes to their pensions, as part of which a one-off payment of nearly 200 million euros will be made into the fund.
"KLM and the Dutch Airline Pilot Union (VNV) reached an agreement allowing the modification of the pilot's pension scheme as per January 2018," Air France KLM said in a statement.
Under the agreed change, the pilots' pension scheme will be transformed from a final salary scheme to a defined contribution scheme.
A defined contribution pension scheme is where a predetermined amount is put into pension savings, but the pension pot on retirement depends on the performance of those savings.
This would "significantly reduce" the volatility of airline's annual pension contribution, the statement said.
As part of the deal, KLM has agreed to pay 194 million euros ($228 million) into the current pension plan in "several annual instalments".
Already under an initial agreement with pilots in 2015, the retirement age increased from 60 to 62 years.
VNV president Arthur van den Hudding said the union was satisfied with the latest agreement.
"We'll submit it to our members on November 7 and the signature should be a formality," Van den Hudding told AFP.
Air France and KLM merged in May 2004, last year carrying some 93.4 million passengers to 328 destinations in 118 countries.
But in the years since, KLM has managed to soar ahead, with its operating profits in 2016 standing at 681 million euros, more than double that of Air France at 372 million euros.