KLM warns of more layoffs as parent company posts €1.7 billion loss

The consequences the second wave of coroanvirus infections had for air travel may mean further layoffs at KLM, the Dutch airline said with the announcement of its third quarter results on Friday. Parent company Air France KLM suffered a loss of 1.7 billion euros in the third quarter of 2020. KLM's loss amounted to 234 million euros, down 745 million euros compared to the third quarter of 2019. 

"These results confirm just how bad things are in the air transport industry," KLM CEO Pieter Elbers said. Without the government's NOW coronavirus support scheme, which subsidizes wage costs for struggling companies, KLM would have suffered a loss of 500 million euros in the third quarter. 

KLM already planned a wide array of measures to downsize in line with the sharp decline in demand and flights. By the end of this year, around 5 thousand employees will leave the KLM group. "In view of recent developments prompted by the second wave of the pandemic and the somber outlook, further rightsizing of the organization will be considered," the Dutch airline said.

A structural reduction in wage costs is one of the conditions the government set to the 3.4 billion euros support package offered to KLM, which consists partly of loans and partly of guarantees. Sources told RTL Nieuws that this condition is causing some strife between KLM and the government. A reorganization plan KLM and the trade unions agreed on earlier this month only involve short-term salary cuts. The government is demanding long-term plans.

KLM has until the end of October - today as the 31st is on a Saturday - to submit its reorganization plans to the government. And no agreements have been made on long-term wage cuts, according to the broadcaster. "If nothing changes, the billion euro loan to KLM threatens to be scrapped," political reporter Roel Schreinmachers said to the broadcaster. 

KLM is important to the Netherlands and the hub function of Schiphol airport. The government is therefore willing and eager to help the airline through this crisis. But not at any price, according to RTL's sources. Finance Minister Wopke Hoekstra is not willing to budge on the conditions set to state aid, the sources said.