Netherlands' flag bearer KLM mulls to freeze wages for its employees over the next two years, citing financial pressures and a need to curb rising costs. This proposal, detailed in a memo to the unions at the start of collective labor agreement (CLA) negotiations, comes after employee wages rose by 25 percent since 2019.
The existing collective labor agreements for ground staff and flight crew is going to expire at the end of February 2025. KLM proposes to conclude a new collective labor agreement for two years or longer, in which "a pause" is made with salaries.
According to RTL Nieuws, the letter states that KLM does not see any room for wage increases. According to the airline, wages have already risen by 25 percent in recent years and are now "higher compared to other airlines and large Dutch companies".
A KLM spokeswoman said :
"The most important thing is that we want a good collective labor agreement for our colleagues, which at the same time does justice to the financial situation in which KLM finds itself," "That is why we have indicated that we do not see any room for a wage increase."
Parent company Air France-KLM's profits are under pressure. Profit in the third quarter was 824 million euros, 122 million less than a year earlier. KLM also posted a lower profit of 396 million euros. KLM's financial director called the financial performance "historically low".
According to KLM CEO Marjan Rintel earlier this month, this situation is not due to passenger numbers,
"Our planes are full and we carried more passengers in the first nine months of this year."
In mid-November, KLM informed unions of mounting financial difficulties despite strong demand and full flights. The airline highlighted challenges such as limited capacity for intercontinental flights, rising operational costs, and uncertainties about the future of Schiphol Airport, including increased tariffs.
“The costs are not under control,” KLM stated in its communication to unions, noting that these challenges have contributed to a low stock price for Air France-KLM and pessimism among analysts.
To address these concerns, KLM aims to improve annual financial results by 450 million euro through productivity improvements, cost reductions, and revenue enhancements. The company is also reassessing investments and considering outsourcing certain activities, including catering.
KLM proposed a two-year CLA, or longer if agreeable, arguing that recent wage increases place its compensation levels among the highest in the Netherlands. The airline emphasized that “compared to other airlines and major Dutch companies, salaries at KLM for similar roles are higher.”
Given the current financial situation, the airline asserted that a “pause” in wage increases is necessary.
KLM has proposed additional cost-cutting measures for cabin and cockpit personnel, including modifying travel allowances by replacing the current daily meal stipend for alcoholic beverages with a soft drink allowance, citing safety and health concerns.
The carrier also plans to explore booking hotel accommodations outside city centers for European destinations to secure lower rates and intends to engage pilots in discussions about raising the retirement age.
The airline is also working on the long-term goals to further reduce personnel expenses. In May this year, KLM revealed plans to cut 700 million euro annually, a significant portion of which will come from staffing-related savings.
Both the Dutch pilots’ union (VNV) and the cabin crew union (VNC) are reviewing KLM’s letter and proposal, assistance from external consultants are being availed.
The unions VNC and VNV do not want to respond to the details of KLM's memo at this moment. They plan to "save their response for the negotiating table".
One of the Unions said that it is "not in the habit of conducting collective labor agreement negotiations through the media".
As per the Airline, discussions on the new collective labor agreements for ground, cockpit and cabin crew will start in the coming weeks. The wage freeze was proposed in a letter sent to relevant unions.
"We want to work with them to find solutions that contribute to a stronger and future-proof KLM for all of us," said the KLM spokeswoman.
Display Picture Courtesy: Cities Today
You may like to read.....
