KLM Group Faces Challenges with High Costs Leading to Losses

By Ivan PetrenkoJul 25, 2024 23:30 PMNews
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white and blue klm airplane during daytime
white and blue klm airplane during daytime. Source: unsplash

The KLM Group reported an operating loss of €31 million for the first half of 2024. Despite higher revenues compared to the same period last year, elevated costs have impacted the financial results. The company plans to implement new measures to address these challenges and improve its financial performance after the summer.

Results

For the first half of 2024, KLM's operational results were a negative €31 million, a significant drop from the positive €129 million reported for the same period in 2023. Revenues, however, increased to €6 billion from €5.6 billion in the first six months of 2023. The airline welcomed nearly 16 million passengers during this period.

"Our results fell short of expectations due to significantly higher costs. The operation was more stable, but capacity could not yet be fully utilised. The fleet could not be fully deployed. We have insufficient numbers of pilots and engineering staff and face long delivery times of spare parts. In the period ahead, the focus will be on cost control and improving our financial performance. We will soon announce additional measures for the entire company. This is a difficult message but essential for KLM's future."

Marjan Rintel, CEO KLM

In the second quarter, operations were more stable, resulting in fewer disruptions for customers. KLM's operational results for the second quarter of 2024 were €260 million on revenues of €3.2 billion, still falling short of expectations due to high costs.

Activities

KLM Engineering & Maintenance saw an influx of new technicians, continuing its vigorous recruitment efforts. Revenues for this segment were higher than in the same period in 2023.

In the Cargo division, increased demand for goods transport supported a recovery in revenues and earnings, though global supply chain issues remain a challenge. To stabilize the network, KLM has built in more reserve capacity, leading to reduced fleet deployment.

Transavia, KLM's low-cost airline, also recorded higher revenues in the first half of the year. Despite difficult conditions, Transavia enabled nearly 4.5 million holidaymakers to travel affordably, generating positive results in the second quarter.

KLM will critically assess its investments, implement cost-saving measures, and explore opportunities to boost revenues to counter the high costs affecting its performance.

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