KLM proposes two-year pay freeze amid rising costs
KLM has announced plans to freeze wages for its employees over the next two years, citing financial pressures and a need to curb rising costs. This proposal, detailed in a letter to unions at the start of collective labor agreement (CLA) negotiations, comes after employee wages rose by 25 percent since 2019.
The airline’s existing CLAs for ground staff, cabin crew, and pilots are set to expire at the end of February 2025. Talks with unions began in October to discuss terms for a new agreement.
In mid-November, KLM informed unions of mounting financial difficulties despite strong demand and full flights. The airline highlighted challenges such as limited capacity for intercontinental flights, rising operational costs, and uncertainties about the future of Schiphol Airport, including increased tariffs.
“The costs are not under control,” KLM stated in its communication to unions, noting that these challenges have contributed to a low stock price for Air France-KLM and pessimism among analysts.
To address these concerns, KLM aims to improve annual financial results by 450 million euro through productivity improvements, cost reductions, and revenue enhancements. The company is also reassessing investments and considering outsourcing certain activities, including catering.
KLM proposed a two-year CLA, or longer if agreeable, arguing that recent wage increases place its compensation levels among the highest in the Netherlands. The airline emphasized that “compared to other airlines and major Dutch companies, salaries at KLM for similar roles are higher.”
Given the current financial context, the airline asserted that a “pause” in wage increases is necessary.
KLM proposed additional cost-cutting measures for cabin and cockpit personnel, including modifying travel allowances by replacing the current daily meal stipend for alcoholic beverages with a soft drink allowance, citing safety and health concerns. The airline also plans to explore booking hotel accommodations outside city centers for European destinations to secure lower rates and intends to engage pilots in discussions about raising the retirement age.
The airline also flagged long-term goals to further reduce personnel expenses. In May, KLM revealed plans to cut 700 million euro annually, a significant portion of which will come from staffing-related savings.
Both the Dutch pilots’ union (VNV) and the cabin crew union (VNC) are reviewing KLM’s proposals with assistance from external consultants.
