Cargo continues to perform well. Turnover rose to €467 million, representing an increase of 13%, even though market capacity was up compared to the third quarter of 2020. The maintenance division continued to suffer from the decreasing demand for third-party maintenance. Third-party turnover therefore amounted to €77 million, reflecting a decrease of 22%.

Our successful focus on cost control and our network strategy, to keep serving as many destinations as possible, compensated somewhat for the negative financial results of our passenger business.

We welcomed 3.7 million passengers in the first six months of 2021. That is a lot lower than the 6.7 million passengers we carried in the first half of 2020, although it bears mentioning that business remained relatively normal for the first two months of 2020, after which operations shut down almost entirely.

The maintenance division has also experienced the impact of delayed recovery, with revenues from third-party contracts down 49% to EUR 225 million. Our cargo business was strong once more, with revenues up 57% to EUR 974 million.

Adjusted travel measures in Europe positive for customers
Recovery was delayed and did not take place as anticipated, only materialising in the first half of 2021, with the coronavirus pandemic coming in waves, accompanied by strict travel restrictions, including compulsory tests for transfer passengers in the Netherlands. This caused uncertainty among customers with regard to booking. Moreover, the strict entry restrictions imposed by many Asian countries and the restrictions on Europeans travelling to the United States remain in force.

It is positive that the Dutch government will change its policy on travel within Europe effective 8 August. This offers our Dutch customers greater certainty and ensures that travel options are less dependent on changes in the number of infections.

The need for harmonisation of travel regulations within Europe remains essential. Our customers need clarity and predictability.

The crisis at KLM has offered fertile ground for innovation, as exemplified by our Upload@Home service, which enables customers to check their coronavirus-related documentation ahead of departure to a growing array of destinations.

For the Netherlands, the connection with the rest of the world via Schiphol is of strategic importance. That is why, in 2020, the Dutch State supported KLM with a loan of EUR 1.0 billion and EUR 2.4 billion in guarantees on credit facilities, linked to major conditions. KLM is grateful to the Dutch government for its support.

In time, KLM will also need capital. For that purpose the Dutch State is in talks with Brussels, Air France-KLM, KLM and other stakeholders. As long as these discussions are ongoing, KLM will not comment on the progress of these talks.

The Dutch Government has made its loan package contingent on certain conditions, one being that all KLM employees must agree to surrender certain employment conditions for the duration of the loan (expected until 2025). KLM has spent the past few months hammering out the details of this austerity programme with the trade unions for cockpit, ground and cabin personnel, in line with the required structure and percentages.

The outcomes of these negotiations have been formalised in outline collective labour agreements and incorporated as such into the restructuring plan that KLM submitted to the Dutch Government on 1 October. The outline agreements define the austerity measures that will apply until early 2022 (for cockpit crews) and late 2022 (for ground and cabin personnel). It was especially important to specify the contribution that all KLM employees would be making towards the airline’s cost-reduction efforts over the entire loan period.

To meet this demand without having to re-enter negotiations, a “commitment clause” was inserted into the agreements between KLM and the trade unions. Unions CNV, De Unie, NVLT, VNC and VKP signed the clause on 31 October, with FNV Luchtvaart and FNV Cabine doing so on 2 November.

Today, 3 November, the Dutch Airline Pilots Association VNV also signed the commitment clause. KLM and the eight trade unions have therefore satisfied a key requirement, clearing the way for the Minister of Finance to assess whether the airline now meets the Dutch government’s demands.

The government has set requirements for the granting of the aforementioned loan package. An important requirement in this respect is that all KLM employees must make a labour contribution during the term of the loan (expected until 2025). In recent months intensive negotiations have taken place with the trade unions in the three collective labour agreement domains (Cockpit, Ground and Cabin) about the fulfilment of the employment condition contribution of KLM employees, in accordance with the percentages and structure required by the government.

The results of these negotiations have been laid down in 'outline collective labour agreement agreements' and are included as such in the restructuring plan that KLM submitted on 1 October. These outline agreements give concrete form to this contribution until the beginning of 2022 (Cockpit) and the end of 2022 (Ground and Cabin).

In October, KLM and the trade unions worked on the main lines of these agreements in detailed agreements. At the same time, on behalf of the government, the Minister of Finance, with the help of a consultancy firm, is assessing the entire submitted by KLM restructuring plan. This evaluation should be completed by the end of October. Specifically in the area of employment conditions, the Minister emphasised to KLM that it should be more explicitly agreed and laid down that the contribution of all KLM employees should apply for the full duration of the loans.

In order to meet this requirement, without repeating the negotiations altogether, there is a 'commitment clause' which will be included in the agreements between KLM and the trade unions. In this clause, all unions must each commit themselves to continue to make the labour conditions contribution with all KLM employees in accordance with the requirement of the Ministry of Finance (whereby the exact details are up to KLM and the unions).

The management of KLM yesterday made an urgent appeal to the unions to agree to this. Today five trade unions CNV, De Unie, NVLT, VNC and VKP signed this clause. FNV (Cabin and Ground) is still considering the matter. The pilots' union VNV has not signed this clause. This means that KLM does not meet the requirements set by the Minister. This outcome was communicated to the Minister this afternoon.

The basic principle of the restructuring plan is that KLM’s existing business model is still valid and valuable, but that far-reaching, structural initiatives are required to ensure KLM’s future success. Owing to the effects of the corona pandemic, KLM is preparing for an extended period during which fewer flights will be operated. The organisation will become smaller and less costly, as well as more sustainable, economical and efficient.

As KLM plays such an important economic and societal role in the Netherlands, the government has offered the airline a loan package, to which it has attached certain conditions. One condition is that KLM staff should contribute to KLM’s restructuring by accepting reduced employment conditions, amounting to income-dependent, graduated cutbacks of up to 20%. These reduced conditions will apply for the duration of the loan period.

KLM has now reached agreement with all unions for ground, cockpit and cabin staff on key principles of this plan for the period through 2022. This includes the unions VNC and FNV Cabine in the cabin domain and the unions FNV Luchtvaart, CNV, De Unie, VKP and NVLT in the ground domain, as well as the Dutch Airline Pilots Association VNV in the cockpit domain.

One of the other conditions imposed by the government is a 15% reduction in controllable costs. The KLM Works Council has been asked to advise on the downsizing and further simplification of the KLM organisation. In addition, there are more than 70 initiatives that will mainly reduce external costs. Significant cost savings will be achieved by phasing out leased aircraft and deploying a more efficient fleet. KLM is also meeting with suppliers and chain partners to contribute to cost reduction.

In terms of labour costs, KLM has already achieved savings by shedding jobs. KLM has already downsized by way of various measures, including non-renewal of short-term contracts (1,500 jobs) and a voluntary resignation scheme (2,000 jobs). By the end of the year, KLM will employ around 4,500 fewer people than it did before the corona pandemic.

Regrettably, further cutbacks cannot be excluded in view of the magnitude and gravity of the crisis. KLM has also reached agreement on a social plan with trade unions for ground personnel and cabin crew. The existing collective labour agreement for cockpit crew already provides a social plan.

Furthermore, KLM will reopen a voluntary resignation scheme targeting specific divisions and departments in order to minimise involuntary dismissals.

The KLM Works Council has reviewed and evaluated 37 requests for advice. The restructuring plan is ambitious and pressure ran high leading up to 1 October. The constructive contribution of divisional staff representatives and the Works Council deserves high praise. The Works Council’s positive advice on restructuring plans was subject to the successful negotiation of a social plan.

In September 2016, it became impossible for any bank to finance the cost of pilot training. Intensive talks between KLM, the KLM Flight Academy, and ABN AMRO Bank have resulted in this new opportunity for KLM Flight Academy students.

Want to become a pilot?
KLM gives preference to graduates of the KLM Flight Academy as it is a Dutch, high-grade school with a long history in training excellent airline pilots. Anyone who is interested can now sign up. The KLM Flight Academy is aiming to start its next class in November. This year, it is running two classes. For more details, please visit the KLM Flight Academy’s website at https://pilootworden.nl/ (in Dutch).