KLM has announced a series of measures aimed at structurally improving its operational and financial performance. Key actions include increasing productivity, simplifying the organization, cutting costs, and postponing certain investments. Despite revenue growth, the company considers these adjustments necessary due to rising costs associated with equipment, personnel, and airport fees.
In the second quarter of 2024, KLM’s revenues grew 5% to €3.2 billion, with an operating profit of €260 million, which translated into an operating margin of 8%.
According to the company, these measures are crucial to support the ongoing renewal of its fleet, a multi-billion dollar investment aimed at incorporating cleaner, quieter, and more fuel-efficient aircraft. KLM is engaged in a modernization process designed to meet government requirements and reduce noise pollution in areas surrounding Schiphol Airport.
The announced package of measures seeks to improve operating results by €450 million in the short term, with the goal of achieving a structural profit margin above 8% between 2026 and 2028, in line with projections by the Air France-KLM group. According to KLM, the plan is part of broader efforts to strengthen its cash position and improve financial management.
Among the specific actions, KLM details that it aims to increase labor productivity by at least 5% by 2025, through automation, mechanization, and reducing absenteeism. The company is also taking steps to address the shortage of pilots and better balance the operation of intercontinental and European flights. Due to a lack of technicians and ongoing supply chain issues with parts, the airline has been forced to operate fewer flights, and measures are being implemented in the Engineering & Maintenance division to reduce cancellations. If these efforts prove insufficient, the company is considering outsourcing part of its maintenance services.
Another key measure is the reassessment of all investments, except those related to safety and regulatory compliance. Projects such as the construction of new headquarters and Engineering & Maintenance facilities will be postponed. However, KLM emphasizes that it will strive to maintain fleet investments as much as possible. The company is also testing new onboard products and optimizing aircraft layout to boost annual revenues by at least €100 million.
Regarding internal structure, KLM is working on simplifying the organization to eliminate redundancies and reduce overhead costs. For instance, the airline plans to reorganize flight services and training programs. Additionally, KLM is evaluating the possibility of outsourcing, selling, or discontinuing activities that do not directly contribute to flight operations.
“The decision to implement these measures is aimed at increasing our revenues and lowering our costs, which will enable us to carry out the planned investments in fleet renewal and customer experience enhancement,” said KLM’s Chief Financial Officer Bas Brouns. According to the company, this set of actions will help maintain its network and services while protecting jobs as much as possible.
“Our goal is and remains running a healthy future proof KLM. 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 that in the coming 105 years will continue to connect the Netherlands with the rest of the world,” concluded Marjan Rintel, KLM’s President and CEO.
