COVID-19: Dutch airline KLM says to shed up to 5,000 jobs due to virus

Air France-KLM received generous state aid to keep the airline in operations. But it will still have to go through a painful headcount reduction, of up to 5,000 jobs.

The Hague: Dutch airline KLM said Friday it would shed up to 5,000 jobs in the coming years due to a "crisis of unprecedented magnitude" caused by the coronavirus pandemic.

"KLM's structure and size must be rigorously adjusted even further in the years ahead. Consequently, a total of 4,500 to 5,000 positions in the entire KLM Group will cease to exist," KLM said in a statement.

Meanwhile, Reuters reported that Air France-KLM is ready to cut capacity by more than the previously announced 20 per cent if the recovery falls short of expectations. Chief Executive Ben Smith was speaking to analysts after the airline group posted a 1.55 billion euro ($1.8 billion) second quarter operating loss and outlined a cautious ramp-up of services for the remaining summer months.

Air France-KLM, which has received 10.4 billion euros in bailout loans backed by the French and Dutch governments, is cutting jobs at its two main carriers while sticking to ambitious fleet-replacement plans. KLM announced 1,500 more layoffs on Friday, weeks after Air France moved to reduce its headcount by 7,580.

A busy decade looming

Paying back aid during a sluggish recovery from aviation's worst crisis "will prove a monumental challenge for the group", said Bernstein analyst Daniel Roeska, who questioned whether investment and labour cuts went far enough.

Air France-KLM finance executives "will have a busy decade", Roeska predicted, "refinancing the state-backed loans, selling the silverware (and) possibly going for several equity raises".