(News Bulletin 247) – The air transport group announced a package of measures involving cost reductions, an increase in productivity and a simplification of KLM’s organization. These measures are expected to improve KLM’s operating profit by around 450 million euros.

Air France-KLM details its plan to increase KLM’s profitability. At the start of the year, the Franco-Dutch transport group announced that measures would be taken to “structurally improve the operational and financial performance of the company”.

This Thursday, KLM presented a battery of actions, which include an increase in productivity as well as cost reductions which will notably involve the simplification of the organization and the postponement of all investments deemed non-essential.

The Batavian company will notably use automation, mechanization and the reduction of absenteeism to increase labor productivity by 5% in 2025. A rebalancing between intercontinental and European flights will be carried out to deal with the shortage of pilots. KLM also plans to outsource, sell or abandon activities “that do not directly contribute to flight operations.”

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A gain of 450 million euros expected

“At the same time, KLM will explore new sources of revenue and seek to generate more synergies,” Air France-KLM said in a press release.

The company will improve its product offering on board aircraft and is carrying out tests to this end, including an extended range of catering. This initiative is expected to increase revenues by 100 million euros per year.

“Despite the growth in revenue, these interventions are necessary due to the increase in the cost of equipment, personnel and airport fees,” explained the Dutch company.

The Dutch company expects these measures to improve its operating profit by around 450 million euros in the “short term”. This should allow the company to align with Air France-KLM’s medium-term objective, namely to achieve a structural operating margin of more than 8% in 2026-2028. In the second quarter, the Franco-Dutch group achieved an operating margin of 6.5%.

“KLM is suffering from high costs and shortages of staff and equipment. Our planes are full, but our capacity has not yet returned to its pre-crisis level (…) This is painful for every colleague at KLM, but it is necessary, and it must be done now,” KLM Chief Executive Officer Marjan Rintel said in a statement.

The Air-France KLM share, however, rose on the Paris Stock Exchange following these announcements, gaining 0.4% at 5:20 p.m. However, the action had lost 14.7% over the previous three, penalized by the rise in oil prices, following a renewed geopolitical tension in the Middle East.