Dutch airline KLM plans 'painful' cost-cutting to combat high outgoings

Dutch airline KLM announced a “painful” round of cost-cutting and other measures on Thursday aimed at boosting the carrier's finances as it continues to recover from the COVID pandemic that grounded planes worldwide.

CEO Marjan Rintel said KLM, along with many other airlines, “is 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.”

The Dutch carrier is part of the Air France-KLM group that had a €7.1 billion ($8.4 billion) loss in 2020 as the global pandemic grounded planes and halted travel plans worldwide, causing a 67% slump in passenger numbers.

KLM said the package of measures is intended to improve its operating result by €450 million ($497 million) in the short term. It did not reveal if the changes would lead to staff cuts, but said it aims to “protect jobs across the company as much as possible.”

“This is painful for every KLM colleague, but it is necessary, and it has to be done now,” Rintel said in a statement.

The cost-cutting will also help clear the way for investments in rejuvenating KLM's fleet to buy quieter and more fuel-efficient planes, said chief financial officer Bas Brouns.

Among the planned measures, KLM said it wants to increase productivity, reduce the impact of pilot shortages and achieve a better balance between European and long-haul flights and look at the option of outsourcing some maintenance.

It also is reconsidering or postponing many planned investments and exploring options to outsource, divest or halt “activities that do not directly contribute to flight operations.”