Dutch low-cost airline KLM has announced it will cut or delay investments and introduce cost-saving measures due to inflated costs combined with its failure to recover its pre-COVID passenger numbers.
“KLM announces measures to structurally improve the company’s operational and financial performance. These measures include increasing productivity, simplifying the organisation, cutting costs and deferring or postponing investments” it said in a statement on on October 3.
According to a CWT Global Business Travel Association’s forecast from September 2024, the rising costs for KLM could be explained by many factors including volatile oil prices, labour costs and constraints and inflationary pressures.
According to KLM CEO Marjan Rintel, the company has been 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,” she said.
The company has announced it will test new products for catering and was considering cutting the number of flights it operates.
“Due to the shortage of technicians and ongoing supply problems of parts, KLM can operate fewer flights,” it said.
KLM added it would delay investments, including the planned construction of a new headquarters.
Although there was no specific mention of job cuts, the company vowed to explore outsourcing, selling, or discontinuing activities that did not directly contribute to flight operations.
Despite the cost-cutting measures, the CEO assured that KLM would strive to maintain its network and services while protecting jobs.
The company also said it aimed to increase labour productivity by at least 5 per cent by 2025 through automation, mechanisation and focusing on reducing absenteeism.
These initiatives were designed to improve KLM’s financial performance by €450 million in the short term, aligning with the Air France-KLM group’s goals, it said.
In its report, CWT forecast that average single airfares in Europe were expected to increase by 1.5 per cent to $797 (€722) in 2024 and rise another 1.4 per cent to $808 (€732) in 2025.
