KLM outlines strategic measures to improve operational and financial performance

KLM announced (03-Oct-2024) a set of measures aimed at improving the company's operational and financial performance. These include increasing productivity, simplifying the organisation, cutting costs and deferring or postponing investments. KLM stated that despite revenue growth, these interventions are necessary due to the rising cost of equipment, staff and airport fees, as well as its ongoing fleet renewal. KLM aims to improve its operating result by EUR450 million in the short term, targeting structural profit margin above 8% by 2026 to 2028, in line with Air France-KLM's group ambition. Key actions include:

• Increase labour productivity by 5% by 2025, including through automation, mechanisation and reducing absenteeism;
• Address pilot shortages to ensure "we can operate all flights with our pilots", with a better balance between inter continental and European flights;
• Address technician shortages and supply issues to reduce cancellations, with possible partial outsourcing of maintenance if needed;
• Reconsider and defer non-essential investments, such as new headquarters and engineering and maintenance buildings, while aiming to maintain fleet investments;
• Enhance onboard services, trialling an expanded catering offer and optimised aircraft layouts to boost revenue by EUR100 million p/a;
• Simplify the organisation, increase synergy, eliminate overlap and overhead, including through the planned reorganisation of flight services and training organisations;
• Explore options for outsourcing, divesting or discontinuing activities that do not directly contribute to flight operations.

The Works Council and trade unions have been informed of the proposed measures and objectives and will be consulted through the standard consultation process. President and CEO Marjan Rintel stated: "KLM is suffering from high costs and shortages of staff and equipment", noting that "our aircraft are full, but our capacity is still not back to pre-corona levels". Mr Rintel added that in order to effectively "remain at the forefront of customer and employee satisfaction as well as sustainability", the carrier "must make clear and decisive choices now". [more - original PR]