KLM hands in restructuring plans to Dutch government

KLM has informed the Dutch government of its plans to cut pay, reduce jobs, and slim down its fleet in order to secure a €3.4 billion government loan.

The measures are among proposals submitted to the national finance ministry outlining how the carrier plans to overcome the coronavirus pandemic, which it calls ‘the worst crisis in almost 101 years of operation’. 

‘Substantively, the plan includes elements such as the reassessment of strategy, cost-cutting initiatives, financial considerations, and how KLM staff will contribute by way of reduced employment conditions’, says the airline.

The proposals are based on the premise that its business model remains ‘valid and valuable’, though the airline anticipates reduced operations to continue for an ‘extended period’.

The financial package from the Dutch government is depedent on a number of conditions, including the requirement for KLM’s staff to accept graduated pay cuts of up to 20% for the duration of the loan. 

KLM has reached agreements with the unions representing its ground, cockpit, and cabin staff through 2022, as implied by the plan. 

An additional condition is a 15% reduction in controllable costs, which the carrier aims to achieve through downsizing and ‘simplification’ of its fleet. 

Phasing out of leased and older, fuel inefficient aircraft is thus expected in the upcoming months and years. 

KLM has aleady reduced its headcount through the non-renewal of short-term contracts and a voluntary resignation scheme, and by the end of 2020, will employ some 4,500 fewer staff than before the pandemic, it reports.