Air France-KLM on Thursday (5 November) announced restructuring measures at Dutch carrier KLM, including a further 15 per cent workforce reduction, as fuel costs continue to rise.
KLM said it would become “a smaller, simpler and more agile organisation”, focusing on its ‘core’ network of 160 direct connections from Amsterdam Schiphol Airport.
The carrier will also operate a “significantly simplified” fleet, with smaller Embraer E195-E2 aircraft replacing planned additional A320neo aircraft to “better match capacity to the demand” across its European network. This will give regional subsidiary KLM Cityhopper “a greater role”, the carrier said. The A321neo will remain in the fleet, while the Boeing 737 and Embraer E190 will be phased out “over the coming years”.
KLM also plans to outsource more ground handling services, with 1,000 job cuts expected on top of previous workforce reductions.
KLM CEO and president Marjan Rintel said: "The environment we operate in is becoming increasingly complex, with global instability, high fuel prices, and growing pressure on the aviation industry. That’s why, at this pivotal moment for KLM, we’re taking far-reaching, sometimes painful measures.”
Rintel added that “further changes to the organisation, employment conditions, productivity, and staffing may still be necessary".
The measures form part of the Dutch carrier’s ‘Back on Track’ programme, introduced in 2025 to “stabilise” operations. KLM aims to achieve an 8 per cent profit margin by 2028.
Q3 metrics
Air France-KLM on Thursday also reported a third-quarter adjusted operating profit of €1.35 billion, up €126 million year on year.
Group revenue rose 7.6 per cent year on year to €9.9 billion. The group also increased its carrier-imposed ticket surcharges to help offset a €436 million year-on-year increase in fuel costs during the quarter.
“The fact that we could increase ticket prices in this period by 7 per cent… [signals] a strong demand… and [that] perceived value is higher than the ticket price,” said group CFO Steven Zaat during an earnings call. His comments seemed to echo those made by Lufthansa and United executives in their recent respective earnings calls, including their view that ticket prices were “too low” before the Iran war.
Nevertheless, Air France-KLM executives described fuel prices as a “major headwind”. The group now expects its total fuel bill for 2026 to reach $9.2 billion, up from a previous forecast of $8.9 billion.
Group revenue per available seat kilometre (ASK) in the third quarter rose 6.6 per cent year on year. Group capacity and traffic increased by 1.3 per cent and 0.9 per cent, respectively. Load factor was broadly stable, slipping 0.4 percentage points to 88.4 per cent.
Premium long-haul demand drove much of the quarter’s revenue growth. Revenue from business and La Premiere first class cabins rose 21 per cent year on year, while premium economy revenue grew 38 per cent. However, demand was largely driven by premium leisure travellers rather than corporate customers.
Air France-KLM CEO Benjamin Smith nevertheless described corporate demand into and out of France as “resilient and very positive”, while corporate demand in the Netherlands remained “stable”. He said continued volatility in the Gulf region was prompting corporate travellers to favour European carriers for flights to Asia.
Smith said the group was approaching the fourth quarter with “prudent caution”. Air France-KLM cut its full-year capacity growth outlook to 2 per cent, from a previous forecast of up to 3 per cent.
The group also took a €10 million hit in October and November from cancellations following last month’s violent protests and looting in France.