KLM Group to cut up to 5,000 jobs by end 2021

KLM will be cutting between 4,500 and 5 thousand full time jobs from the entire KLM Group by the end of 2021, the Dutch airline announced on Friday. The airline called Covid-19 a "crisis of unprecedented magnitude" for which the "road to recovery will be long and fraught with uncertainty". Which means that KLM's structure and size will have to be adjusted to fit the declined operations in the years ahead, the airline said.

The coronavirus crisis brought the number of KLM flights down to less than 10 percent by the start of April. In the second quarter, only 15 percent of originally scheduled flights were operated. On Thursday, KLM  announced the worst half-year results in the company's history, posting a loss of 768 million euros in the first two quarters of 2020.

Operations increased to 30 percent in July. But countries are starting to tighten their travel restrictions again, the airline said, making customers more cautious when it comes to booking a ticket. "In all scenarios, demand is only expected to recover by 2023 or 2024 at the earliest." 

"In order to guarantee KLM's existence in the long term, the airline must adapt its size to the new reality. KLM therefore finds itself compelled to reduce its workforce down to the number needed for the planned operation in 2021/2022." And that means cutting between 4,500 and 5 thousands full time jobs (FTEs). 

The airline already started taking measures on this front. 1,500 FTEs worth of temporary contracts will not be renewed. The airline set up a voluntary departure scheme and expects to cut 2 thousand FTEs in this way. Natural attrition through retirement and the like is expected to cut another 500 FTEs in 2020 and 2021. 

KLM is also ealing with some "mismatching functional skills and capabilities". Which means that "alternative solutions" need to be found for around 1,500 positions - up to 500 ground positions, 300 cabin crew positions, 300 cockpit positions, and around 400 positions at KLM subsidiaries and Air France-KLM functions, the airline said. 

Given the high level of uncertainty, KLM warned that the number of job cuts may have to increase, if the production levels fall further than expected in 2021 and 2022. 

KLM CEO Pieter Elbers believes that this reorganization will help KLM "emerge from this crisis in a stronger position while retaining as many jobs as we can in a responsible manner and repaying the loans as quickly as possible," he said. 

The government gave KLM a bailout package of 3.4 billion euros in loans. One of the conditions for this state aid is that the airline reorganize and cut costs by at least 15 percent. KLM plans to present its full reorganization plan in October. 

"KLM employees are loyal, professional and hard working. They are always ready to serve our customers, one another, the company and society at large, Elbers said "It is incredibly difficult and sad for KLM to now have to bid farewell to valuable, committed colleagues. Certainly in view of how much we have succeeded in achieving together in recent years. The forthcoming period will be devoted to saying goodbye to colleagues who have to leave with due care and to reconstructing KLM."