KLM to Cut as Many as 1,000 Jobs as Travel Recovery Hopes Fade

(Bloomberg) -- Air France-KLM’s Dutch arm is cutting as many as 1,000 jobs on top of 5,000 shed last year in a sign the resurgence of Covid-19 cases in Europe is pushing airlines to take more drastic measures to survive the pandemic.

The workforce needs to be reduced because a recovery in air travel is taking longer than initially expected, KLM said in a statement on Thursday. Health and travel restrictions have particularly hurt booking to long-haul destinations, the carrier said.

KLM’s decision to cut staff was made even before the airline weighs the impact of new, even tougher rules imposed by the Dutch government starting Saturday, the carrier said. These include a ban on flights from South America, South Africa and the U.K. and mandatory rapid virus tests for in-flight personnel before takeoff.

The measures will mean the carrier will have to cancel about 60% of remaining flights, Pieter Elbers, head of KLM, told Dutch daily De Telegraaf in an interview. A spokeswoman declined to comment further.

New Strains

The move by KLM comes as airlines around the world slash more flights as vaccination campaigns begin only slowly in many countries and new, more virulent strains of the virus are identified. Europe remains the region hardest hit by travel curbs, with carriers operating at about a quarter of their pre-pandemic capacity, according to John Grant, an analyst at aviation-data group OAG.

Air France-KLM has been kept afloat by the French and Dutch governments, who together hold a combined 28% of the company. They have already provided 10.4 billion euros ($12.6 billion) in the form of direct loans and guarantees, swelling the airline group’s debt burden.

While Air France-KLM is considered a strategic asset by the French government, which has vowed to allocate more public funds to help it survive, a new aid package is still under discussion with the Dutch government.

Elbers called on the state to ease requirements for in-flight personnel, saying staff would be at risk of not being able to get on flights and he wouldn’t want to leave them behind.

Deutsche Lufthansa AG Chief Executive Officer Carsten Spohr painted a slightly more optimistic view of the industry’s prospects on Thursday, saying vaccine programs should slow the virus spread and allow for traffic recovery in the second quarter.

Lufthansa doesn’t expect to burn through all of its 9 billion-euro bailout from Germany and other countries, he said at an online event hosted by Eurocontrol. The carrier has used around 3 billion euros and reduced its cash burn by half since the first wave of lockdowns.