KLM to Restructure 5,000 Jobs in USD1.1B Cost-Cutting Drive
(MENAFN) Dutch flag carrier KLM announced sweeping organizational changes on Thursday that will affect approximately 5,000 positions as the airline seeks to strengthen its finances and generate an additional €1 billion ($1.1 billion) in annual earnings amid global uncertainty, soaring fuel costs and mounting pressure across the aviation sector.
The restructuring will cover all business divisions, with the company aiming to establish a leaner and more streamlined organization through outsourcing, internal reorganization and expanded cooperation within the Air France-KLM group.
KLM expects its workforce positions to shrink by nearly another 15%, with around 5,000 roles already reorganized or included in planned restructuring measures.
The changes include operations involving 1,250 positions at KLM Catering Services, which have been managed in partnership with gategroup since the spring.
Meanwhile, responsibilities linked to another 800 Ground Services positions will be handed over to external service providers.
An additional 2,000 positions, including 1,500 at customer contact center Cygnific, are set to be transferred to Air France-KLM. The airline also expects productivity gains to eliminate the need for a further 1,000 positions.
KLM said it would work to minimize the consequences for employees by relying on natural staff departures, voluntary arrangements and opportunities to move into other positions.
Chief Executive Marjan Rintel said international instability, persistently high fuel prices and increasing challenges facing the aviation industry had made extensive organizational changes necessary.
The company's management also cautioned that additional measures involving staffing levels, employment conditions and organizational structures could be introduced depending on the progress of the restructuring.
Productivity and financial targets
KLM has set a target of achieving a permanent productivity increase of at least 8% by 2028, while maintaining very limited wage growth.
To advance the plan, the airline intends to negotiate new collective labor agreements with trade unions.
The targeted €1 billion improvement would bring annual earnings to €1.4 billion, providing additional financial resources for investments in aircraft, customer services and employees.
KLM said it had already delivered more than €750 million in lasting financial improvements over recent years through initiatives such as cutting office-based positions, leaving vacant jobs unfilled and consolidating office facilities.
However, the airline acknowledged that these efforts had not been enough to guarantee its long-term financial stability.
Despite the restructuring, KLM intends to preserve its network of 160 nonstop destinations from Amsterdam's Schiphol Airport, relying on a more efficient and modernized fleet.
The airline also plans to prioritize routes that generate the greatest value for passenger connections and its direct-flight network, as it works to return its European operations to profitability.
The restructuring will cover all business divisions, with the company aiming to establish a leaner and more streamlined organization through outsourcing, internal reorganization and expanded cooperation within the Air France-KLM group.
KLM expects its workforce positions to shrink by nearly another 15%, with around 5,000 roles already reorganized or included in planned restructuring measures.
The changes include operations involving 1,250 positions at KLM Catering Services, which have been managed in partnership with gategroup since the spring.
Meanwhile, responsibilities linked to another 800 Ground Services positions will be handed over to external service providers.
An additional 2,000 positions, including 1,500 at customer contact center Cygnific, are set to be transferred to Air France-KLM. The airline also expects productivity gains to eliminate the need for a further 1,000 positions.
KLM said it would work to minimize the consequences for employees by relying on natural staff departures, voluntary arrangements and opportunities to move into other positions.
Chief Executive Marjan Rintel said international instability, persistently high fuel prices and increasing challenges facing the aviation industry had made extensive organizational changes necessary.
The company's management also cautioned that additional measures involving staffing levels, employment conditions and organizational structures could be introduced depending on the progress of the restructuring.
Productivity and financial targets
KLM has set a target of achieving a permanent productivity increase of at least 8% by 2028, while maintaining very limited wage growth.
To advance the plan, the airline intends to negotiate new collective labor agreements with trade unions.
The targeted €1 billion improvement would bring annual earnings to €1.4 billion, providing additional financial resources for investments in aircraft, customer services and employees.
KLM said it had already delivered more than €750 million in lasting financial improvements over recent years through initiatives such as cutting office-based positions, leaving vacant jobs unfilled and consolidating office facilities.
However, the airline acknowledged that these efforts had not been enough to guarantee its long-term financial stability.
Despite the restructuring, KLM intends to preserve its network of 160 nonstop destinations from Amsterdam's Schiphol Airport, relying on a more efficient and modernized fleet.
The airline also plans to prioritize routes that generate the greatest value for passenger connections and its direct-flight network, as it works to return its European operations to profitability.
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