Airline Leader Interview, KLM CEO Marjan Rintel

Transcript

Michael Bell:We have a wonderful kickoff interview today with Marjan Rintel, President and CEO of KLM.

Marco Navarria:Please join me.

Michael Bell:Marjan made it in last night, but after a long trip, right? So thank you for being here and early in the morning for this discussion, Marjan.

Marco Navarria:Yes.

Michael Bell:We're thrilled to have you with us. So, um, there's still a lot of people around, uh, determination.

Marjan E. F. Rintel:So we, we made it.

Michael Bell:You made it. What time did you get in?

Marjan E. F. Rintel:Around 12, 1 o'clock last night.

Michael Bell:12, 1 o'clock.

Marco Navarria:Okay.

Michael Bell:Yeah, well, uh, we appreciate the, uh, the commitment to be here. So lots to discuss. Uh, obviously you've been at KLM 3 years. For those of you not familiar with Marjan's— It's 3 years plus 15 Yes, but I meant as CEO. I should have clarified. Marjan actually began in the airport business, right?

Marco Navarria:Yes.

Michael Bell:With Amsterdam Schiphol, various positions there, learned the business kind of from the ops side up, and then joined KLM, as you said, 15 years there, various positions, marketing, operations, etc., and then left actually for the railway business. We're going to talk a little bit about that.

Marjan E. F. Rintel:Great. I still love it.

Michael Bell:Thank you. What you learned on the railway side and how that differs or has helped you here. And then since '22, back at KLM. Obviously, KLM doesn't need much introduction, one of the leading airlines in the world. And I've also— one of the real innovators around technology innovation and even the hub-and-spoke model, which was, I think, one of the first airlines, if not the first in Europe, to really do that. But let's talk about that to start. I mean, talk a little bit about the business model strategy at KLM and how it has evolved within the Air France-KLM Group. Is it largely still around that dual hub approach, or how are you modifying the model to suit the current environment that we're in?

Marjan E. F. Rintel:So, so first of all, uh, the hub-and-spoke model, it's, it's invented by KLM, of course, and it's still really the core in, in what we do today and who we are, and, and it's successful. So, uh, we stay with that basic It's the reason why we turned 106 years in October.

Marco Navarria:Congratulations.

Marjan E. F. Rintel:Yes, thank you. So, so that, that, that's great, but then you always have to look at how do we redefine it, how do we restructure the airline, how do we adapt to the innovations or what's going on in the world with the geopolitical issues we have. So, so we look at the hub-and-spoke model not, not to change it, but what can we do in our network and how can we adapt together with Air France, with Transavia, with the others.

Michael Bell:And how specifically, how do you see that change coming, if you will, or what changes have you made to the traditional hub-and-spoke approach?

Marjan E. F. Rintel:Well, the main thing in, in the Netherlands is that it's impossible to grow. So we need to adapt. So the costs are rising, there's no growth anymore, so We need a new fleet coming in. The new fleet will be bigger than the older fleet, so that's the—

Michael Bell:So upgauging will be a big thing.

Marjan E. F. Rintel:Upgauging is one of the most important things. Then I think we are still unique in all the small destinations. I just opened, for example, Kittilä in Lapland in Finland in the north, which is obviously a small destination, but it's important for us to feed Our long-haul destinations. And, and that's the reason why from the Netherlands we still have 161 destinations. Which is incredible.

Michael Bell:And you guys weren't only the first around the hub and spoke, but I think also around alliances, right? With Northwest Airlines.

Marjan E. F. Rintel:Yes.

Michael Bell:A real innovator that way, right? And obviously now a key player in, in SkyTeam. Talk about your constraints and how it is that you are dealing with what's being sort of impinged on you with Schiphol. wanting flight caps, etc. I mean, I, I know you get asked this question.

Marjan E. F. Rintel:My colleagues are over there.

Michael Bell:I know you get asked this question a lot, but help us understand the KLM response to that challenge, if you will.

Marjan E. F. Rintel:So, so I think with, uh, with the new CEO— he's not new anymore— Pieter van Hoort, we work, uh, well together. So we, we are really aligned in, uh, you need this hub infrastructure in the Netherlands for the Dutch economy. And you really need to invest in that infrastructure as well because I think looking back 40, 50 years with the main port Schiphol, with the one roof concept, and then KLM with the hub and spoke model made us famous. And at least we need to invest and maintain that. That's really important. So, we are really aligned also about that reduction is not the goal in itself. That's the obvious reason for the government is to reduce slots to reach noise reduction.

Michael Bell:It's a means, not the objective, if you will.

Marjan E. F. Rintel:Which is strange in itself. So, hopefully now with the new government, it will change bit by bit again. And we see a bit of a change that that you need a strong economy, and that you need hubs, and that you need infrastructure, and that you need a home carrier for your economy, for businesses in the Netherlands, and for all the connections we have. And and that's acknowledged more and more and more. The only other topic is we people need to be able to fly from the Netherlands and. And they still need to afford it. And that's what we see in the Netherlands, that we have all those national taxes, which is, is, is, is really dangerous for a hub carrier.

Michael Bell:And in addition to perhaps capacity constraints on you that way, and one of the things we talked about in our prep for this, Marjan, was, was the, the question of the level playing field and ensuring that you guys have a level playing field within the Netherlands, within the EU, and beyond. So, uh, are people hearing Marjan?

Marjan E. F. Rintel:You hear me now? Oh, you missed everything before?

Michael Bell:That was the confidential part of the discussion. You don't have to repeat yourself. How about the level playing field? What's the, what's the core set of issues there? And, and, and What needs to be done to ensure—

Marjan E. F. Rintel:So it's on 2 levels, the level playing field. So first of all, we need to have a level playing field within Europe. Uh, if, if you look at everything, and, and, and, and I— we really support the, the objectives of the EU to become more sustainable, to have mandates in place, to use SAF, to develop eSAF. So, it's a really— we really support the mandates, but then at the end, it needs to be affordable, and it needs to be for all the airlines flying in and out of Europe, because otherwise there will be a difference in at least ticket prices at the end for the customers, and then our competitive position will be less and less and less. So, that's why we need the level playing field. The EU announced the STIP a few weeks ago, and therefore they are going to start to support building SAF facilities in Europe, taking care of funds that we need to make ESAF, the electro-sustainable aviation fuel, affordable. So, so we make steps, but the level playing field in itself is important, not only in Europe but also in the Netherlands. So if we increase long-haul taxation, which is a bit strange at this point, if you look at the Nordics where they reduced it, if you look at Germany where they reduced it, if you look at Belgium where they have €10 in place and they want to increase it in the Netherlands to €71, So the gap between what we have and can offer in the Netherlands is compared to the countries around us is different. And if you want to travel with a family of 4 and you have to pay €300 more starting your holiday from Amsterdam, we see a lot of people traveling to Brussels and to Düsseldorf.

Michael Bell:So those are some of the external things that influence your, your cost or competitive situation. Some of the things you are doing are within your own control. You guys have this Back on Track program to drive hundreds of millions of dollars out of your cost base. You've got a new labor agreement. So talk about how that's coming along to help you get your costs where they need to be, Marjan.

Marjan E. F. Rintel:Yeah, so our focus within KLM is really the operational performance and the financial stability. And, and we need that for the huge investments in front of us. So the investments in fleet we have, the investments in building, the investments in sustainable aviation fuel, but also which you discussed yesterday, I think, in AI and, and IT. So we need, we need to reach at, at least a certain COE level and margin To pay for all those investments, and if you look at all the headwinds in the Netherlands, all the headwinds we had so far the last couple of years—it's about reduction of slots, it's about taxation, it's about the ongoing debates in Parliament on on transfer tax, it's it's about the introduction of long-haul tax. It's sorry sorry, but it's about the enormous increase in airport fees, which We are today the most important airport in Europe besides the UK. The labor cost and the inflation in the Netherlands, so we really— and it's impossible to grow anymore. So therefore, you need to reduce your own cost levels to make it happen and to be financial in good shape.

Michael Bell:Have you got labor on board with the need to make these changes? You know, sometimes you need a burner platform.

Marjan E. F. Rintel:That's always difficult, certainly when you We are 106 years old, so, so we closed CLAs the last couple of years. I think we did a good job compared to other Dutch companies. They increased salaries with 8 to 10%. We do it with 3% the next, next 2 years. But still, we need productivity, and productivity increase is one of the main topics in the Netherlands in general.

Michael Bell:So flipping to the revenue side, you guys have been Making good changes, introduced a new aircraft, the A321, but also a new product category, Premium Comfort Class. So tell us about Premium Comfort Class and how that's working for you.

Marjan E. F. Rintel:Yeah, so we were not the first. I think we were the last, to be honest. But then still, it's, it's besides economy, economy comfort, premium comfort business, we don't have first class, but, but the Premium Comfort Probably it's just a typical Dutch product. It's a lot of comfort and you pay half of the price of business.

Michael Bell:That's a good deal.

Marjan E. F. Rintel:That's a good deal. So people really appreciate the premium comfort, the seats, the food, the service, and, and the, the NPS, it's, it's sky high.

Michael Bell:So it's been a good investment.

Marjan E. F. Rintel:So it's a good investment. It's executed. throughout the fleet, and we need to increase it in the next coming years. So we will redo the fleet again to increase the premium comfort.

Michael Bell:You mentioned AI, obviously a topic du jour for most airlines. Big opportunities on the revenue side. How are you guys deploying AI? And you guys have been an innovator around technology, but what are you doing specifically in this area?

Marjan E. F. Rintel:So we have a lot of initiatives. So first, I think, and that That is for everyone around here as well. You need to understand it yourself. If you don't understand it yourself and you don't deep dive with your board in AI, then it's very difficult to—

Michael Bell:Have you done that?

Marjan E. F. Rintel:Set direction. Yeah, I've done it for a couple of days. So I have Gemini and Claude and everything on my telephone. We need to use the internal AI system, Talia, which we developed ourselves. But the first day you think they speak a different language, like Chinese or something, which is difficult to understand for us. But if you are in and if you understand it, then it's really important to focus and to invest in 2, 3 breakthroughs, because AI can do a lot for you. So we are focusing now on fuel consumption. So if we can reduce the fuel bill, It really helps the CO2 emissions. And the other topic we did is to reduce the waste on board by predicting everything that's used on board, the food and beverages, and therefore we reduce the waste by 50% at least.

Michael Bell:How are you personally using it? You mentioned you had an immersion and indoctrination.

Marjan E. F. Rintel:Yeah, I'm using it all the time, all day. No, so I'm— do you call me a boomer or what do you— Simon, do you call me a boomer or not?

Michael Bell:We're not going to ask you.

Marjan E. F. Rintel:Depends on your phone if you have that. Oh, that's the phone. No, so I use it just still for information, but also for presentations, asking questions, checking things, but not enough.

Michael Bell:And not to prepare for this discussion, hopefully.

Marjan E. F. Rintel:Okay, very good.

Michael Bell:You mentioned sustainability. I want to touch on that. That's obviously a huge deal in the EU, huge deal in the Netherlands, but you guys have not been laggards. You've been innovators that way, and you're one of the leaders in Project Skypower. You mentioned ESAF. Talk about that. What is Project Skypower? What is KLM's role?

Marjan E. F. Rintel:I'm proud of Project Skypower. We started it together with Paul Polman 2 years ago already. And now 80 companies are in that SkyPower organization, and we meet 4 or 5 times a year, and we really have an office in place as well, helping us to make ESAF a future possibility. So in that group of CEOs, it is the full system at the table. So it's not only airlines, it is suppliers.

Michael Bell:It's the ecosystem around people.

Marjan E. F. Rintel:The full ecosystem is around the table discussing what do we need from the EU government to help us, like regulation, like make it affordable. And, and, and, and we are really connecting, uh, to at least have a facility starting to build in the Netherlands, Europe, somewhere, so that ESAB, which we need in the mandate for 2030, will be possible. And if you need to have it in 2030, then at least this year a facility needs to be execute it, and they need funds, and then the facilities, they need offtake agreements, and then they look at me, and then I say, I'm not going to sign for an offtake agreement for 15 years if the price of ESAF is still 10 times more expensive than the fuel we use today, and fuel is the biggest bill of an airline.

Michael Bell:Of course.

Marjan E. F. Rintel:But when you are in that ecosystem, you could at least— and that's what the EU today is doing— look for solutions and discuss what is necessary to overcome a certain period.

Michael Bell:And it sounds like the EU is forthcoming in terms of support for that.

Marjan E. F. Rintel:They are really listening, and they are really listening to Schiphol as well as the ecosystem. So the coalition is working, if you will. Yes, the coalition is really working. Yeah, we're not there yet, and I'm still not sure if we will make it for 2030, but at least we are doing everything we can.

Michael Bell:You left for some time to the railways and have come back. You know, I find a lot of airline aviation executives, they gravitate back to the industry. It's in their blood. But talk a little bit about what experience you gained there and how you might be applying that today back in aviation.

Marjan E. F. Rintel:Yeah, but I think it's always good to step out for a couple of years. So I did it for 9 years, and then, and then you enter a totally different environment. And what I noticed within the Dutch Railways— the Dutch Railways is a public-owned company, and it is, uh, it is in— it is a main part and an important role in society in the Netherlands. So, so A lot of people go every day to school, to their work, to the hospital. Everybody is in the train, and and they are really connected to the environment. They are really connected to what is needed in a country. They are really connected to the government and and to parliament, and they are really open for what they need to do and what their position is. And and I think that's that's. That's the thing I brought back to the airline. We need to open up.

Michael Bell:How have you done that? I imagine part of the thinking of the board in bringing you back was that connectivity to government, but how have you leveraged that for KLM's benefit, if you will?

Marjan E. F. Rintel:Well, I think the main achievement is what we did with the reduction of movements. We really could change the tone of voice. And that's not about— it's not about reduction of movements, it's about noise reduction. So we developed Schoner, Stiller, Zuiniger. It's more clean, less noise, more efficient. And in that, we showed the government with a 10-point positioning paper that we could achieve noise reduction without reducing slots, and that we could reduce and make the 20% noise reduction easily with new fleet, with changes in the network, with operational measures, with cooperation with the air traffic control and Schiphol.

Michael Bell:Have you been able to validate that? Has that proven out?

Marjan E. F. Rintel:I'm, I'm pretty sure we will make the noise reduction.

Michael Bell:Yeah, terrific. So it's just the how. Yeah, to get to the what, right?

Marjan E. F. Rintel:Yeah, and, and that's, and that's what you need to do. And you need to at least discuss these topics yourself with the members of parliament, with all the people working for the government, and, and show your face and connect with them and, and show you're serious, you take your responsibility, and that you have solutions yourself.

Michael Bell:Marjan, CEO role critical in leading an organization. You You came on the heels of a longstanding successful leader in Pieter Elbers, who's gone on to new frontiers in India and some challenges there too in the last few weeks. Talk a little bit about your leadership style and approach and what you've brought to KLM in terms of putting your mark on it as a leader.

Marjan E. F. Rintel:That's always, I think, quite difficult, and certainly in the airline environment, which is male-dominated still. So you really need to change, and then your leadership style is different as well. My leadership style, at least, is different.

Michael Bell:What is your leadership style?

Marjan E. F. Rintel:So it's more the female leadership style, I believe. So it's more about connection, it's more about autonomy, it's more about if there's an issue, show me the scenarios, The possibilities, the risks, have a debate, and then decide.

Michael Bell:So you work in a broader organization that has been quite progressive around women, right? I mean, look across Air France-KLM. Air France has a female CEO.

Marjan E. F. Rintel:Yeah, we're very lucky.

Michael Bell:Some of the other subsidiaries have had or have female CEOs as well. So what's been the impact of you as a woman coming into the company? And how are you helping advance the cause of women in your company?

Marjan E. F. Rintel:Yes, so it's always— it's still a debate, and it's not only about men and women. It's a bit old-fashioned in a way, and so we need to have broader diversity in the company. And if you look in the company, we really lack— and certainly in airline companies, we really lack a broader diversity in the top. But you have to pay attention to this topic every day. So if there's a vacancy, you, you need to discuss, and you really need to be persistent that, that there needs to be a woman on the list, always. And, and I frequently discuss with women that they say, I'm not ready for that job, or, or I need to, I need to have balance in my life, and All kinds of bullshit reasons not to take up an opportunity, and that's where I come in.

Michael Bell:Make it clear that we need to. You know, it's— I'm interested in your thoughts around how the pendulum swinging back, if you will, under the Trump administration in the US on this topic has sort of changed the tone of the discussion, if you will, in the United States. I imagine it's not the same in Europe, but how, if at all, Is that impacting how you guys look at diversity in general, not just gender diversity, if you will?

Marjan E. F. Rintel:I don't know. I think we always— so diverse, you need to be diverse for a reason. If you believe in that reason, it's not about men or women or broader diversity, it's about the best person on a job. The objective is to have the best person on the job. There's no reason— you can stick to it and you can believe in it and you can achieve it. So talk about legacy.

Michael Bell:It's only 3 years in, but fast forward the film to, let's say, 10 years in or 7 years in, however long you anticipate your tenure to be. What do you want your legacy to be at KLM when you step out to the next chapter?

Marjan E. F. Rintel:Well, at least that in the Netherlands we are back to stable government where they acknowledge that a hub is critical for the economy, that businesses that will come to the Netherlands— 2, 3 weeks ago, a very big pharmaceutical company arrived in the Netherlands and said we will stay here because of the infrastructure and because of all the frequencies and destinations that are in. So hopefully we can stabilize this debate about reduction, taxation, investments. And then in the end, hopefully we can transform KLM, which is a 106-year-old company, but we need to transform to this new period in time using AI for the best customer service, invest in customers with premium economy, and still be a front-runner in sustainability and everything we do with a stable operation and a financial performance with a new fleet Are you trying to consciously impact the culture of the organization after 100-something years? Yes, I think we have— the next 2 years will be really important.

Michael Bell:What in particular? If you could wave a magic wand and change something about KLM culture?

Marjan E. F. Rintel:We need to change the way of working. What we did the last 110 years will be not the way of working the next decade. And that's focused on productivity and focused on the use of technology and AI.

Michael Bell:Yeah, well, it sounds like you're setting a good role example for everybody in that regard. We've got 4 minutes left, so let's turn it to the audience, either on Slido or with the mics. Who might have a question for Marjan?

Marjan E. F. Rintel:Not from the airport, no.

Michael Bell:One here at the front, Henry. Oh, just one sec, we'll run the mic to you, Henry. Thank you. Thank you. Uh, Henry Hartog from Atmosphere Research. Uh, the, um, Project SkyPower, are you the only airline that is in that, or are there any other airlines that are participating in that consortium with you?

Marjan E. F. Rintel:Yes, for sure, there are other airlines in there. So SAS, of course, my future colleague Anko, who was here I think yesterday, is partner as well, but also BA and EasyJet. So, so it's, it's, it's broader than, than only Air France. And KLM, yeah. And and what we still have today are startups in the in the e-fuels like Sky Power. No, within Sky Power like Arcadis and like Power to X and like Sky Energy and others. The ones are missing are the big oil companies like Shell and BP and the others. So they They withdraw from producing SAF and eSAF as well in the Netherlands, but there are a lot of companies who want to start an eSAF facility, the smaller ones. Other questions for Marjan?

Michael Bell:I have one, Marjan. The impact of the coalition of SkyPower is Coming to fruit, right? To bear fruit. Why not, or maybe you are doing this, build a similarly strong coalition of business enterprises in the Netherlands who insist on having a strong growing hub there? Or how are you leveraging the major corporate presence in the Netherlands to support your cause?

Marjan E. F. Rintel:Well, that's, that's a very actual question. So today, and it's live if you want to follow it, The former CEO of ASML—I assume you all know what ASML is—the biggest chip producer, the machine producer in the world. Peter Wenning—he's asked a few weeks ago to come up with a report for our next government, which will be in place hopefully in in the next in. next few weeks, uh, and, and advise the government of what's needed for big companies. So all big companies participated, including, including KLM, but also VNO and CEBE, who's the representative of the businesses in the Netherlands. And, and it's just out, and it's big news, uh, currently.

Michael Bell:And does aviation feature?

Marjan E. F. Rintel:And aviation is a main part of it.

Michael Bell:Good.

Marjan E. F. Rintel:So we hosted with 20 companies a roundtable with Peter Wenning to, to show him what needs to be done for, for a critical infrastructure which is affordable and which wants to be a front-runner in sustainability. And it's all in this report that will be presented to the future Prime Minister today.

Michael Bell:Awesome. Well, good luck with that.

Marjan E. F. Rintel:Yes.

Michael Bell:It's encouraging to see the strong leadership that KLM is benefiting under your leadership, Marjan. We thank you for making the trip from Amsterdam under challenging circumstances to share your thoughts with the group. Please join me in thanking Marjan.

Marjan E. F. Rintel:Thank you.

Marco Navarria:Marjan, can I keep you on stage for one moment if that's okay? I'm just going to take a very quick minute. It's interesting that obviously sustainability was at the forefront of what we were talking about just now. And for those that don't know, we have our Global Sustainability Awards as part of our Asia Summit, which was October, and KLM won the European Sustainable Airline of the Year. So we thought we'd take a moment to present that to you.

Marjan E. F. Rintel:Oh, that's great.

Marco Navarria:A round of applause for KLM.

Marjan E. F. Rintel:Thank you so much. Thank you.

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