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Both the French and Dutch governments have come to the rescue of their jointly owned national airline. Image Credit: Reuters

Paris: Air France-KLM's Dutch arm will get a 3.4 billion euro ($3.8 billion) bailout from the Netherlands after weeks of wrangling over how much help the carrier needed to ride out the coronavirus crisis.

KLM will receive 2.4 billion euros of state-backed commercial funding and 1 billion euros in direct government loans, Dutch Finance Minister Wopke Hoekstra said.

The aid comes on top of 7 billion euros of loans and guarantees from the French government for Air France and further hammers home the reliance by Europe's biggest airlines on state aid to get through the industry slump. On Thursday, rival Deutsche Lufthansa AG won shareholder approval for a 9 billion euro bailout from the German government.

Both France and the Netherlands are shareholders of Air France-KLM, the region's second-biggest airline group after Lufthansa.

But comes with strings

The Dutch support comes with strings attached, with KLM required to suspend dividend payments. The carrier secured the aid after the Netherlands said two months ago that it would provide between 2 billion euros and 4 billion euros of assistance.

French Finance Minister Bruno Le Maire agreed in April to provide 4 billion euros of state-backed commercial funding and 3 billion euros of direct state loans to Air France, which must curb domestic flying by 40 per cent.

While governments across Europe have stepped in to help airlines, the packages from Air France-KLM and Deutsche Lufthansa AG are by far the biggest.