KLM to slash up to 2,000 jobs, Lufthansa to scrap dividends over coronavirus crisis

THE HAGUE, Netherlands – Dutch national airline KLM said Friday, March 13, that it will cut up to 2,000 jobs as it battled the impact of the new coronavirus outbreak, and announced other cost-cutting measures.

Chief executive Pieter Elbers said KLM – which has around 33,000 employees – will also ask personnel to work shortened hours, while grounding its fleet of 6 Boeing 747s from April 1. 

“In the coming months we’ll reduce 1,500 to 2,000 jobs to mean that not only in the coming weeks, but in the coming months we will have fewer colleagues,” Elbers said in a video message posted on KLM’s website.

The airline’s top official said the job cuts mainly included part-time workers, those destined for retirement and natural attrition.

“We believe this is adequate to ensure that there are no other forced retrenchments,” Elbers said.

The Dutch carrier, which merged with Air France in 2004, predicted that flight numbers would drop by 20% in March and 30% in April as the airline suspended flights to China and Italy as a result of the COVID-19 outbreak.

Air-France KLM warned Tuesday, March 11, that the coronavirus outbreak will hit its business harder in the coming months after February passenger numbers fell by 0.5%. 

Last month, Air France-KLM put the coronavirus cost to the airline at 150-200 million euros up to April. 

“A lot has happened in the last 5 days,” Elbers said as the number of cases globally climbed to 140,720 with 5,347 deaths across 124 countries and territories.

‘Exceptional crisis’

German airline Lufthansa on Friday said it would suspend dividends for 2019 as the aviation industry grapples with an “exceptional crisis” caused by the coronavirus outbreak. 

The move is aimed at preserving liquidity at a time when the group faces a slew of flight cancellations and a slump in bookings, in part due to government-ordered travel restrictions. 

The group’s executive board “decided to propose to the Annual General Meeting that the dividend payment for the financial year 2019 shall be suspended,” Lufthansa said in a statement. 

The group, whose brands include Eurowings, Austrian Airlines and Swiss, earlier this week said it was cancelling 23,000 flights between March 29 and April 24 as countries scramble to stem the pandemic.

Many holidaymakers have ditched their vacation plans over the upheaval and companies worldwide have limited business travel.

Several countries have also closed their borders to passengers from hard-hit nations.  

In the United States a ban on visitors from mainland Europe took effect from Friday, while Russia said it would limit flights with the European Union from Monday. 

Lufthansa said the group’s flight schedule “may be reduced further by up to 70% compared to the original plan” in coming weeks.

As part of efforts to cut costs, Lufthansa plans to postpone investments and put some staff on reduced working hours, benefitting from relaxed regulations newly put in place by the German government to help firms weather the storm.

Nevertheless the group expects adjusted operating profits (EBIT) this year to be “significantly below” 2019’s 2.0 billion euros ($2.3 billion), given “the exceptional crisis the aviation industry is facing”. 

Lufthansa said it was in the midst of raising additional funds and had already raised around 600 million euros in recent weeks, giving it a current total liquidity of around 4.3 billion euros.  

Lufthansa will unveil detailed financial results for 2019 on March 19. – Rappler.com