2023-07-28 05:25:00
One thing is clear, says KLM CEO Marjan Rintel, and that is that the Dutch still really want to fly. “Even now that ticket prices have gone up.”
It will therefore not be the fault of holidaymakers and other travelers, but KLM is currently not getting rich from it. This is because the company continues to incur a lot of costs. Reducing this is something KLM must ‘focus more sharply on’, admits chief financial officer Erik Swelheim.
If only to please shareholders. Due to the high costs, KLM had little extra profit from its increase in turnover, and the share price of parent company Air France-KLM therefore plunged on Friday morning.
Costs just keep going up
More cutbacks, that is also what state agent Jeroen Kremers recently insisted on. On behalf of the state, Kremers had to ensure that KLM complied with the conditions for corona support. Cutting back was one of those conditions. But Kremers judged in his final report that the costs this year are still 250 million euros too high, and according to him this will only increase in the coming years.
This puts KLM in a difficult position, especially given the staff shortages the company is currently facing. Last year, these shortages at KLM and Schiphol, among others, led to a lot of delays for travelers, something that all parties have successfully prevented so far this year.
But once more this year KLM cannot plan as many flights as there is demand for, and this year too, this is partly due to a lack of staff. The solution, the unions say, is a better collective labor agreement.
Latest wage offer ‘completely insufficient’
Talks regarding that broke down this week. KLM has three collective labor agreements: one for ground, cabin and cockpit crew. Both the trade union FNV (which negotiates on behalf of ground and cabin crew) and the VNC (Association of Dutch cabin crew) call KLM’s latest wage offer completely insufficient.
FNV director Birte Nelen understands that KLM must pay attention to costs, she says. But cutting back on staff now is not the right solution, she says. “KLM is missing out on income because the staffing is not up to par,” she says. For example, KLM sometimes has to cancel flights because too few flying staff can be scheduled.
“It is especially a problem for the ground staff,” notes Nelen. Before an aircraft can take off, passengers must be able to check in. Their luggage must also be handled, the catering arranged and the aircraft made ready for flight.
There are not enough people for that and as a result aircraft are now grounded for an unnecessarily long time, said CEO Ben Smith of parent company Air France-KLM in a press conference regarding the half-year figures. And a plane that remains on the ground is very expensive. That costs money for maintenance, but yields nothing.
“So invest in people to solve that. Make sure you remain attractive, with higher wages, healthy schedules and more permanent contracts.” Then the income will automatically increase with which these extra costs can be compensated, says FNV employee Nelen.
Contraction at Schiphol may play a role
KLM may keep in mind during the collective labor agreement negotiations that from next year fewer flights may be flown via Schiphol. Minister Harbers (infrastructure) decided that Schiphol had to shrink in order to tackle noise nuisance. The aviation sector initially successfully challenged this in court, but Harbers still won on appeal.
This will cause ‘serious damage’, in particular to airlines with many holiday flights, the Court acknowledged. Think of Transavia, which is part of the KLM group. Transavia has had bad months in any case, with a shortage of aircraft, which meant that many flights had to be canceled at the last minute.
Within parent company Air France-KLM, the Dutch branch performed significantly less than the French Air France in the second quarter. While KLM’s profit remained more or less the same compared to a year earlier, Air France’s profit shot up (from 133 million last year to 482 million now).
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