KLM’s NATO Summit disruptions weigh on results, but losses narrow amid cost cuts

The NATO summit, which forced KLM to cancel flights at Schiphol, had a negative impact on the airline’s results last quarter. KLM is examining the exact impact before entering into talks with the government about compensation. Despite rising costs, the airline managed to reduce its operating loss in the first half of this year, thanks in part to cost-cutting measures.

KLM CEO Marjan Rintel declined to provide an estimate of the financial damage caused by the NATO summit. “But there was obviously a financial impact,” she said in a commentary on the half-year results. Due in part to the NATO summit, KLM posted an operating loss of 2 million euros for the first half of the year.

While that did represent an improvement of 31 million euros compared to a year earlier, the airline still faced several other setbacks. For instance, KLM had to ground a number of its 787 aircraft last quarter because earlier maintenance work had not followed the correct procedures for certain components.

A positive development in the company’s financials was revenue for the first half of the year, which rose by nearly 6 percent to 6.3 billion euros. The airline also managed to save 185 million euros as part of a cost-cutting program announced last year. KLM is sticking to its target of 450 million euros in savings for the full fiscal year.

“We’re making progress, but as expected, costs and market uncertainty continue to rise,” said Chief Financial Officer Bas Brouns. “Only by fully implementing the improvement program can we stay on course toward a financially healthy future.” That uncertainty is driven in part by the announced increase in aviation taxes, ongoing conflicts in the Middle East, and the situation in Russia, whose airspace KLM still cannot fly over.

The trade agreement between the European Union and the United States is good news, according to Rintel and Brouns. Among other things, it stipulates that aircraft and aircraft parts will be exempt from import duties.

KLM expects to receive three new 787s from American aircraft manufacturer Boeing and four A321neos from Airbus later this year. Still, Rintel remains somewhat cautious. “The agreement could still have significant implications, for example, for our cargo operations.”

The Air France-KLM group posted a significantly higher profit for the months of April through June compared to a year earlier. The Franco-Dutch airline group recorded a net profit of 649 million euros, up from 165 million euros the year before. This was partly due to higher revenue and lower fuel costs.

Air France-KLM’s revenue rose by 6 percent to over 8.4 billion euros. This increase was partly driven by a rise in passenger numbers: the group’s airlines carried more than 27 million people in the second quarter, about 6 percent more than a year earlier. In addition, more passengers opted to purchase higher-priced tickets for added comfort during their flights.

At the same time, fuel costs remained low in recent months compared to last year, due to a decline in oil prices since then. On an annual basis, this resulted in savings of over 200 million euros in the second quarter.

Another factor contributing to the improved results is the absence of setbacks that affected the company last year. In the second quarter of 2024, for example, Air France already felt the negative impact of the upcoming Olympic Games in Paris. Many travelers appeared to avoid the French capital during the sporting event, as evidenced by the lower number of summer bookings at the time.