AMSTELVEEN, December 4, 2002 - The arbitration tribunal deciding the legal dispute between KLM and Alitalia, concerning the termination of their Alliance Agreements on April 28, 2000, issued its award to both parties this afternoon.

The tribunal concluded that KLM’s termination of its Alliance Agreements with Alitalia was not valid. The arbitrators have granted Alitalia’s claim for damages to the sum of EUR 250 million (plus interest), but have dismissed Alitalia’s additional claim to the sum of EUR 43 million.

At the same time, the tribunal granted KLM’s claim that Alitalia should repay EUR 100 million (plus interest) that KLM paid Alitalia in December 1999, as a contribution to development costs for Malpensa Airport, near Milan.

On balance, this results in an obligation for KLM to pay Alitalia EUR 150 million (plus interest and costs).

In an initial response, KLM stated that it is surprised and disappointed at the outcome of this dispute, which Alitalia filed with the arbitration tribunal in August 2000. The implications of the tribunal’s award will have a significant negative effect on KLM’s profit-and-loss account for the current fiscal year. Payment of the claim will have a negative impact on KLM’s current cash position.

Although the outcome of this dispute has no immediate impact on the continuity of the company, KLM will scrutinize the tribunal’s decision and review the situation that has now arisen.

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