KLM has submitted a wholesale restructuring plan to the Dutch ministry of finance outlining job cuts, pay reductions and further cost cutting.
Dutch carrier KLM revealed 3,500 employees have already left since the Covid crisis began though voluntary redundancy and ending short-term contracts and a further 1,000 jobs would go by the end of the year.
It also confirmed agreement on pay cuts of up to 20% with unions representing pilots, cabin crew and ground staff.
However, KLM warned: Further cutbacks cannot be excluded in view of the magnitude and gravity of the crisis.”
The restructuring plan, including reductions in head count and graduated pay cuts, were among conditions attached to a Dutch government loan guarantee of €3.4 billion agreed in June.
The pay cuts are for the duration of the government-backed loans due to be repaid by 2025.
The carrier pledged to meet a further condition to reduce other costs by 15% and said it is negotiating with “supplies and chain partners” to contribute savings.
KLM said it would phase out leased aircraft as it downsizes.
In a statement, the carrier said: “KLM is preparing for an extended period during which fewer flights will operate. The organisation will become smaller and less costly.
“The government has offered 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%.”
KLM president and chief executive Pieter Elbers said: “The plan we submitted to the Ministry of Finance is a condition for obtaining a financial package, making this an important milestone in KLM’s recovery.
“The aim is to ensure KLM survives this crisis and emerges stronger. The measures are far-reaching and painful for KLM staff, but they are necessary.
“I am grateful for the support of the Netherlands government and proud of the efforts of all involved – KLM staff, our Works Council and trade unions.”
KLM sister carrier Air France secured agreement on €7 billion in state aid through direct loans and loan guarantees from the French government in April.