< Reveal sidebar

KLM Faces Tough Times, Cuts Cost

The airline announces cost-cutting measures to improve financial stability.

A KLM 737-800 in Amsterdam (Photo: AirlineGeeks | William Derrickson)

KLM Royal Dutch Airlines has announced a series of cost-cutting measures to improve its financial performance and ensure long-term sustainability. The airline, facing rising costs and operational challenges, seeks to bolster its bottom line amid a challenging industry landscape.

KLM’s announcement comes as the airline industry continues to recover from the COVID-19 pandemic. While passenger demand has rebounded, airlines have faced challenges related to rising fuel prices, supply chain disruptions, and labor shortages. According to Marjan Rintel, KLM’s President and CEO, the airline’s flights are full, but its overall capacity has not yet reached pre-pandemic levels.

Cost-Cutting Initiatives

In a recent statement, the carrier outlined several initiatives to be implemented over the coming months. These measures include increased productivity through automation, mechanization, and reduced absenteeism, aiming for a 5% increase in labor productivity by 2025.

Additionally, KLM will streamline its organizational structure to eliminate redundancies and reduce overhead costs, potentially restructuring certain departments or outsourcing non-core functions. The airline will also identify areas where expenses can be cut, such as real estate, non-critical investments, and procurement.

To mitigate the impact of the pilot shortage, the airline is implementing strategies to ensure that all flights can be operated with a balanced distribution between intercontinental and European routes. Additionally, the airline is addressing the shortage of technicians and supply chain issues that have led to reduced flight operations. Measures are being taken to minimize cancellations, and if necessary, KLM will explore options for partially outsourcing maintenance services.

Financial Goals and Employee Impact

The airline’s financial goals also include achieving a structural profit margin above 8% by 2026-2028, targeting a €450 million improvement in its operating result. Bas Brouns, KLM’s Chief Financial Officer, emphasized that the new measures will both increase revenue and cut costs, strengthening the airline’s cash flow and improving financial management.

He noted that these actions will support KLM’s billion-dollar investments in fleet renewal and customer experience enhancements. Brouns highlighted that in the coming years, KLM will transition to quieter, cleaner, and more fuel-efficient aircraft, aligning with government agreements and reducing noise pollution for Schiphol’s local communities.

While the announced measures are expected to have a positive impact on financial performance, they may also have implications for employees. KLM has expressed a commitment to protecting jobs as much as possible, but some restructuring could be necessary.

 

Tolga Karadeniz
Latest posts by Tolga Karadeniz (see all)

Author

  • Tolga Karadeniz

    Tolga is a dedicated aviation enthusiast with years of experience in the industry. From an early age, his fascination with aviation went beyond a mere passion for travel, evolving into a deliberate exploration of the complex mechanics and engineering behind aircraft. As a writer, he aims to share insights , providing readers with a view into the complex inner workings of the aviation industry.

    View all posts

Subscribe to AirlineGeeks' Daily Check-In

Receive a daily dose of the airline industry's top stories along with market insights right in your inbox.

Related Stories

Boeing Slashes DEI Department in Latest Staff Shake-Up

Boeing dismantled its global diversity, equity, and inclusion department on Thursday, according to a report by Bloomberg citing sources familiar…

Emirates Expands African Network

Emirates announced plans to strengthen its African network further by introducing additional flights to Entebbe, Uganda, Addis Ababa, Ethiopia, and Johannesburg,…

Frontier Sued Following Emergency Landing

Three Frontier passengers are suing the carrier saying they were traumatized and injured after being stranded inside a smoke-filled cabin…