KLM Announces 'Painful' Cost-Cutting Measures Amid Rising Costs and Staff Shortages

KLM, the Dutch airline, has announced a significant and “painful” round of cost-cutting measures aimed at improving its financial standing as it continues to navigate the challenges posed by the COVID-19 pandemic. On Thursday, CEO Marjan Rintel highlighted that the airline, like many others in the industry, is grappling with soaring operational costs and a shortage of staff and equipment. Despite having full flights, Rintel pointed out that KLM’s capacity has yet to recover to pre-pandemic levels.

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As a member of the Air France-KLM group, KLM faced considerable losses during the pandemic, reporting a staggering 7.1 billion euros (approximately $8.4 billion) in losses for 2020 alone. This financial downturn was largely due to the grounding of planes and the suspension of travel, resulting in a 67% decline in passenger numbers.

To address these financial pressures, KLM's new package of measures aims to improve its operating results by 450 million euros (about $497 million) in the short term. While specific details about potential staff reductions were not disclosed, the airline expressed a commitment to protect jobs as much as possible. Rintel acknowledged the difficult nature of these changes, stating that while painful for employees, they are essential for the airline’s survival and must be implemented without delay.

The cost-cutting efforts are also expected to facilitate investments in renewing KLM's fleet with quieter, more fuel-efficient aircraft. Chief Financial Officer Bas Brouns emphasized the importance of these investments for the airline's future competitiveness.

Among the strategies KLM plans to implement are increasing productivity, addressing the pilot shortage, and optimizing the balance between European and long-haul flights. The airline is also considering outsourcing some of its maintenance operations and is reviewing planned investments. Furthermore, it is looking into divesting or halting activities that do not directly contribute to its flight operations.

The labor union representing KLM's ground personnel, led by Hacer Karadeniz, stated that they will closely monitor the situation to assess any potential impact on staff and will engage in discussions with KLM regarding these changes.

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