KLM Says Doing Nothing Would Hurt More, So It’s Cutting 15%

KLM Royal Dutch Airlines has announced a wide-ranging restructuring aimed at lifting its annual earnings by €1 billion, to a total of about €1.4 billion. The Dutch flag carrier says the money is needed to invest in its fleet, its customer experience and its people, and that waiting would only narrow its options.

The cost falls on staff. KLM plans to reorganize roughly 5,000 positions, which would cut its workforce by around 15%. About 1,000 of those jobs disappear through productivity improvements, while the rest, in catering, ground services and customer contact, have been or will be outsourced or moved elsewhere. The airline hopes natural attrition, voluntary arrangements and internal transfers will soften the blow.

The network will change too. KLM wants to restore profitability on short-haul and regional flying by concentrating on routes that feed connections and the nonstop network from Amsterdam Schiphol. Its smaller KLM Cityhopper jets are expected to play a larger role in matching capacity to demand, which suggests some European frequencies could look different.

CEO Marjan Rintel called the measures “far-reaching, sometimes painful,” pointing to global instability, high fuel prices and mounting pressure on the industry. KLM says earlier efforts already delivered more than €750 million in structural improvements, and that more digital passenger services and closer work with outside partners on baggage and apron handling will carry the rest.

Sources: Simple Flying