This was expected: in difficulty since the resumption of traffic, KLM decided to launch a savings plan to “structurally improve operational and financial performance”. The Dutch company, a subsidiary of the Air France-KLM group, is implementing a set of measures to increase revenues and reduce costs, which will affect human resources management, investments or even the outsourcing of certain activities. The stated objective is to achieve an improvement of 450 million euros in operating income in the short term.
“It’s painful for every KLM employee, but it’s necessary, and it must be done now”concedes Marjan Rintel, general director of KLM, in a press release. The fact is that the Dutch company has found itself faced with a difficult equation since the takeover. Despite full planes, it is struggling to redeploy its full capacity and make its flights profitable in the face of exploding costs.
“Like many other airlines, KLM suffers from high costs and a shortage of staff and equipment”explains the boss of the company.
While it prided itself before Covid on being the most efficient company in the group in the face of Air France which was multiplying its losses, KLM saw its operating margin deteriorate in 2023 and become lower than that of its sister then in full swing. growth. Air France has since collapsed, but KLM has not done much better. In the first half of 2024, it also went into the red with an operating loss of 31 million euros despite an increase in its capacity and revenue. Despite a rather interesting spring, the company has decided to take action.
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Productivity increase of 5%
The final measures are currently being negotiated with the works council and the trade union organizations. KLM management nevertheless communicated its proposals. In terms of human resources, the company is aiming to increase labor productivity by at least 5% by 2025. It wants to rely on “automation, mechanization and reduction of absenteeism”. This goes with measures to deal with the shortage of pilots and technicians, which is affecting its recovery since the health crisis, with the aim of continuing to increase capacity and reducing flight cancellations. KLM also announces organizational simplification measures to increase synergies.
« “We will do everything in our power to maintain our network and the services offered to our customers and to protect jobs across our company” », assured Marjan Rintel.
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Postponement of investments
In terms of investments, a certain number of postponements should take place, such as the creation of new headquarters, engineering and maintenance buildings. Efforts on the fleet and on-board services will be “maintained as much as possible”, knowing that the company is engaged in a billion-dollar investment plan to renew its aircraft – which this strategic plan must make it sustainable. New services should make it possible to increase revenue by around 100 million euros per year.
The last avenue put on the table is “to study the possibilities of outsourcing, transfer or abandonment of activities which do not directly contribute to flight operations”. An option already practiced by the group with the creation of operational subsidiaries for the management of a pool of spare engines or more recently for the Flying Blue program.
