Dutch airline KLM said Friday that between 4,500 to 5,000 job positions in the entire KLM Group will cease to exist as a result of “a crisis of unprecedented magnitude” as a result of the coronavirus pandemic.
KLM said that since the outbreak of the COVID-19 virus at the start of 2020, numerous measures have already been taken to deal with the current circumstances. However, expectations are that the road to recovery will be long and fraught with uncertainty.
“This means that KLM’s structure and size must be rigorously adjusted even further in the years ahead,” the company said in a statement.
In the wake of the coronavirus outbreak, KLM said it gradually began reducing the size of its network in February to operate less than 10% of its original number of flights by the start of April. In the second quarter, only 15% of the original number of flights were operated. In July, 30% of the original flights were operated and load factors are lagging behind.
“As a result, while the network is again being gradually and carefully expanded, revenues are lagging far behind,” KLM said.
Prospects for the airline industry – and KLM in particular – are uncertain, the company said.
“Different countries are now beginning to tighten their more relaxed travel restrictions. This is 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,” KLM said, adding, “The degree and speed of recovery will depend on a number of factors including the development of the virus, economic recovery and customer travel behavior.”
KLM said that government support in the form of a direct state loan and guaranteed bank credit facilities amounting to a maximum of €3.4 billion will enable the company to navigate the crisis in the forthcoming period.
However, to guarantee KLM’s existence in the longer term, the airline must adapt its size to the new reality, the company said.
“KLM therefore finds itself compelled to reduce its workforce down to the number needed for the planned operation in 2021/2022. Of the current total of 33,000 FTEs in the entire KLM Group, the workforce must be reduced by 4,500 to 5,000 FTEs to 28,000 FTEs in the course of 2021,” KLM said.
KLM’s size is already becoming smaller – and will continue to be reduced – based on the current measures, which include the non-renewal of temporary contracts (1,500 FTEs) and the Voluntarily Departure Scheme (2,000 FTEs). Additionally, natural attrition (500 FTEs) through retirement and the like in 2020 and 2021 will also contribute to the reduction needed, the company added.
Despite the measures already taken, even fewer people will be needed at KLM in the years ahead, the company said. “Additionally, for positions on the ground we also need to deal with some mismatch in functional skills and capabilities.”
“Unfortunately, for this reason and taking into account the mismatch, alternative solutions will have to be found for ca. 1,500 positions. This relates to up to 500 ground positions, 300 cabin crew positions and 300 cockpit positions and approximately 400 positions at KLM subsidiaries and Air France-KLM group functions,” said KLM.
Given the high level of uncertainty, KLM said it keeps open the possibility of further reductions in case the production levels are revised further down for 2021/2022 than the -20% planned now.