KLM submits job-slashing restructuring plan to Dutch state

KLM Royal Dutch Airlines (KL, Amsterdam Schiphol) has submitted a plan to restructure its operations to the Dutch state, a condition to receiving a EUR3.4 billion euro (USD4 billion) aid package of a government loan and guarantees, it said in a statement on October 2. The plan, concluded the previous day, is now under review at the Ministry of Finance. The Dutch wing of Air France-KLM said 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.” The plan foresees overall cut costs of 15%. KLM has reached agreement with all unions that “staff should contribute to KLM’s restructuring by accepting reduced employment conditions, amounting to income-dependent, graduated cutbacks of up to 20% […] for the duration of the loan period [to the end of 2022],” the statement said. Another aspect of the plan is that KLM has agreed to halve its carbon dioxide emissions by 2030. However, in a message to employees on October 2, chief executive Pieter Elbers admitted that the carrier would probably have to cut more jobs than the 20% workforce reduction specified in the plan, which includes 4,500 job losses already announced for 2020. This is because the covid-19 pandemic is likely to limit flights more extensively than the 20-25% fall it had anticipated for 2021, he explained. “We now expect even lower production, which ultimately means we need fewer people,” Elbers said in the message, as quoted by Reuters. “Another 10% drop in production (so 30-35% down from 2019) would mean around another 1,500 jobs less.” On October 1 – just in time for the deadline of the same date the Dutch government had set for the restructuring plan – the union FNV representing cabin crew said it had reached agreement with KLM on temporary wage cuts and better severance payments for those losing their jobs in the restructuring.