KLM faces ‘painful’ €450m restructuring process

Netherlands-based carrier KLM has announced plans for a “painful” €450 million restructuring process as capacity has yet to return to pre-pandemic levels.

The airline, which is part of the wider Air France-KLM Group, said the move was necessary due to high costs and the shortages of staff and equipment in key areas, as well as rising airport fees.

KLM said its planned cost-cutting measures would be designed to “maintain its network and services for customers and to protect jobs across the company as much as possible”.

Marjan Rintel, president and CEO of KLM, said: “Just as many other airlines, KLM is suffering from high costs and shortages of staff and equipment. Our aircraft are full, but our capacity is still not back to pre-corona levels.

“We want to remain at the forefront of customer and employee satisfaction, as well as sustainability. To continue doing this effectively, we must make clear and decisive choices now. This is painful for every KLM colleague, but it is necessary and it has to be done now.”

The airline added that initiatives will include “increasing labour productivity by at least 5 per cent by 2025, including through automation, mechanisation and reducing absenteeism”.

KLM said it would try to “resolve the impact” of a shortage of pilots, as well as taking measures at its engineering and maintenance operations to cut the number of flight cancellations. The airline warned that if this was not successful, it may look to partly outsource some maintenance functions.

Investments such as KLM’s planned new headquarters and engineering/maintenance buildings will also be “reconsidered and postponed”. The airline added that it will “strive to maintain our fleet investments as much as possible”.

KLM added that it will look to “simplify the organisation”, including a planned reorganisation of flight services and training organisations. It will also examine options for “outsourcing, divesting or discontinuing activities that do not directly contribute to flight operations”.

“Our goal is and remains running a healthy future-proof KLM,” insisted Rintel. “We will do everything we can to maintain our network and services for our customers and protect jobs throughout our company. With this package we are laying the foundation of a strong KLM.”

KLM has been affected by the ongoing saga of the Dutch government’s attempt to cut flights permitted at its Amsterdam Schiphol base in an effort to reduce noise pollution.

The latest proposal by the new coalition government would see Schiphol’s flights reduced by between 3 and 5 per cent from November 2025 onwards, although this is a smaller cut than in previous plans.

KLM is not the first major European airline to announce a major restructuring in 2024, with Lufthansa Group unveiling a “comprehensive turnaround programme” for its flagship Lufthansa Airlines earlier this year.