On March 13th, a video was distributed to all KLM employees. The video had the airline’s CEO, Pieter Elbers, deliver the news that 1,500 to 2,000 jobs would be cut in light of the coronavirus situation. In addition to this, 30-40% of flights will be suspended by the airline as it fights to manage its costs and avoid financial ruin.
“The impact of the corona virus on aviation and KLM is enormous and the situation is constantly changing and deteriorating. With the latest developments in the US, we have entered a crisis of unprecedented magnitude, and it is clear that KLM must take drastic measures to deal with this exceptional situation,” -KLM statement via NL Times
In tandem with Netherland government announcement
The announcement came on the same day that Dutch Minister Cora van Nieuwenhuizen announced that all flights from the countries most badly affected by COVID-19 will no longer be allowed access to The Netherlands.
Coming into effect Friday evening, the decision will affect flights from China, Hong Kong, Iran, Italy and South Korea. Several of these countries are served by KLM Royal Dutch Airlines.
Translated from Dutch, this is what KLM’s CEO had to say about the situation:
“With all the uncertainty and a growing number of countries closing their air space, I don’t know whether the scenario of a 30 per cent or 40 per cent decline (in flights) might not be too optimistic…We could see a scenario like Italy, in which the whole system shuts down.” -Pieter Elbers, CEO, KLM Royal Dutch Airlines
According to Singapore’s Business Times, KLM has a workforce of 35,000 employees. The plan now is to slash up to 2,000 jobs as well as reduce the working hours of remaining staff by one-third. It will also be taking the following steps to ensure its survival:
- Make a request to the Dutch government for support and launch other initiatives to secure more financing (if necessary)
- Reduce investments by up to €400 million
- Delay the pay-out of remaining 2019 bonuses and profit-sharing owed to KLM executives, management, and staff for at least six months
- Negotiate with its unionized labor to reduce working hours by 30 percent next quarter
- Expedite the retirement of its remaining Boeing 747 aircraft
- Implement further cost savings up to €100 million
These actions are in addition to what the airline has already implemented, which include a hiring and training freeze, as well as delaying major IT and commercial real estate work. It has also suspended the majority of company business travel and external consultancy work.
Being 100 years old and the heart of Dutch aviation, it is highly unlikely that KLM will fall in the same manner as an airline like Flybe. However, it will require intense commitment from the government, in combination with tough sacrifices from its massive workforce.
On Friday, Netherlands Prime Minister Mark Rutte said his government was ready to support KLM and the Dutch aviation industry. Once this exceptional circumstance passes, we look forward to seeing KLM back on its feet.
Do you have upcoming bookings with KLM and consider your plans at risk? Let us know in the comments.