KLM Royal Dutch Airlines has submitted a restructuring plan to the Netherlands ministry of finance as the carrier seeks to overcome the slowdown in travel surrounding the Covid-19 pandemic.
The airline is seeking government loans and guarantees to the value of €3.4 billion.
The plan outlines how KLM intends to overcome the worst crisis in almost 101 years in operation, explaining how it intends to fulfil the conditions imposed by the government.
“Today we took a major, exceedingly important step towards restructuring KLM.
“The plan we submitted to the ministry of finance today is a condition for obtaining a financial package, making this an important milestone in our recovery.
“The aim is to ensure that KLM survives this crisis and emerges stronger than before.
“The measures are far-reaching and painful for KLM staff, but they are necessary,” said KLM chief executive, Pieter Elbers.
The plan includes a reassessment of strategy, cost-cutting initiatives, financial considerations and information on how KLM staff will contribute by way of reduced employment conditions.
Overall, the organisation hopes it will become smaller and less costly, as well as more sustainable, economical and efficient.
Staff are expected to see pay cut by up to 20 per cent as part of the process, while around 4,500 jobs will go in total.
One of the other conditions imposed by the government is a 15 per cent reduction in controllable costs.
The KLM Works Council has been asked to advise on the downsizing and further simplification of the KLM organisation.
In addition, there are more than 70 initiatives that will mainly reduce external costs.
Significant cost savings will be achieved by phasing out leased aircraft and deploying a more efficient fleet.
KLM is also meeting with suppliers and chain partners to contribute to cost reduction.