A few sentences about the chaos at Schiphol. And some comments on the government’s decision to limit the number of flights at Amsterdam airport to 440,000 per year. It was a modest public debut for Marjan Rintel on Friday at the presentation of the quarterly figures for Air France-KLM. The former president of NS has been at the helm of KLM since 1 July.
Air France-KLM presented positive results for the second quarter on Friday. They were better than analysts expected. Air France, KLM and low-cost airline Transavia not only sold many more tickets than last year, they were also able to charge a higher price for them. The group expects it will take longer than previously reported before planes are as full as before the pandemic.
Thanks in part to a tax reduction at KLM of 300 million, the Franco-Dutch airline turned a profit for the first time since the pandemic.
“The strong recovery we are seeing this summer is putting the entire aviation industry to the test,” said Air France-KLM CEO Ben Smith. “While Air France-KLM had prepared for almost pre-pandemic demand, our airlines are not immune to the major operational challenges looming around the world.”
Marjan Rintel’s contribution to the cracking telephone presentation was modest, but it addressed the pain points that Air France-KLM will have to work hard on in the coming period.
In addition to inflation and high petroleum prices, there is the lack of personnel in aviation and the forced shrinkage of Schiphol.
The announcement that the airport must reduce by 12 percent has surprised the Air France-KLM management. It is up to Rintel – more than her predecessor Pieter Elbers did – to strengthen ties with the government. Rintel is to become more top woman at KLM, who is stepping down. Elbers, who worked at KLM for thirty years, was previously CEO before KLM. For the staff and against the evil outside world in The Hague, Paris or Brussels.
The debut – and the challenges – of Marjan Rintel in seven figures.
The price of a return ticket to Amsterdam and Paris Nord. Former NS top woman Marjan Rintel didn’t fly to the Air France-KLM presentation this week, she took the high-speed train.
On Instagram, she posted a photo at the station in Paris: “I’m on my way to Paris city center with Thalys for meetings about the numbers. You can now meet KLM transfer passengers on the route to Brussels. Nice to see that the air-rail product is being further developed.” In his first weeks, Rintel, for example, does what Pieter Elbers almost never did. Elbers did not believe that the international train was a sufficient alternative to the plane, even though KLM, NS, the government and other stakeholders had agreed to seriously work on cooperation between aviation and rail. If you replace short-haul flights with train travel, it saves CO22emissions and frees up space at Schiphol.
In one of his reports, state agent Jeroen Kremers, who oversees the agreements made by KLM and the cabinet on corona support, criticized Elbers’ attitude to the train. It is obvious that the former NS boss Rintel will put more effort into a flexible air-train combination.
262 million euros
KLM’s operating result in the second quarter. In the same period last year, KLM still suffered a loss of 185 million euros. For the fourth quarter in a row, KLM achieved a positive operating result. KLM’s quarterly revenue grew to 2.8 billion euros. “These figures show that customers want to fly with us again, both for business and leisure travel,” it said in a statement.
The entire Air France-KLM group achieved a quarterly turnover of 6.7 billion euros, 2.5 times as much as last year. The group is almost at revenue in 2019. The group’s result in the second quarter was 324 million euros (second quarter 2021: 1.4 billion loss). IAG, parent of British Airways, Aer Lingus and Iberia, also reported a profit for the first time since the pandemic on Friday.
KLM also outperformed Air France. The French company’s turnover was 4.1 billion euros, gross profit 133 million. Air France therefore has a profit margin of 3 percent, KLM at 9 percent. Despite the queues at Schiphol and the strikes from, among others, the airport’s fire service at Charles de Gaulle, Air France’s home port.
Air France-KLM expects to have to spend extra on compensation for passengers. This is mainly due to the chaos at Schiphol. Steven Zaat, the group’s Dutch CFO, said on Friday that 70 million was much more than the group usually pays in compensation – without going into details. Zaat does not expect Air France-KLM to pay such an amount.
CEO Smith said on Friday: “The good results after the severe corona period bring mixed feelings. Customers were hit hard by the major disruptions in May and June. Airlines and airports across Europe are inadequately prepared for the rapidly increasing number of passengers .” Air France-KLM is considering legal action against Schiphol over the disruptions, but gave no further explanation on Friday.
Earlier this month, Marjan Rintel already sent an e-mail to regular KLM customers. “We sincerely apologize to anyone who has had to deal with disruption on their KLM flight or experienced problems with luggage.”
This is the maximum number of flights from Schiphol from the end of 2023. Before the pandemic shut down air traffic, the airport was home to 500,000 flights. KLM operates about half of all these flights. The Dutch government limits Schiphol’s capacity because air traffic causes too much noise. The contraction also appears to be an advance on the nitrogen measures for the transport sector that the government will announce later this year.
Also read: Schiphol Airport is to be shrunk, and this is the first time
Both Rintel and Smith reiterated that the group was completely surprised by the government’s decision. According to Rintel, there are alternatives to limit the nuisance of air traffic. She will discuss this with Minister Mark Harbers (Infrastructure and Water Management, VVD) in September.
Harbers repeated to the Bloomberg news agency this week what he had already said in the House of Representatives: Schiphol must stop wanting to be the “price fighter” for European aviation. What this means for KLM’s network is still unclear. Air France-KLM is considering legal action to challenge Schiphol’s shrinking.
KLM has spent a total of 924 million euros in a year and a half of the state guarantees of a total of 3.4 billion euros that it received to survive the pandemic. The company paid out the aid in three stages. This means that Marjan Rintel is not freed from the interference of state agent Jeroen Kremers. KLM retains the credit facility – for worse times.
Kremers checks the conditions that the government attached to the aid. He publishes a critical report every few months. Kremers says time and time again that KLM should no longer facilitate tax evasion for pilots living abroad. Elbers had little appetite to tackle it. The matter is now in Rintel’s board of directors.
Air France-KLM has also significantly reduced the corona support from the French state to the group and to the airline Air France. The issue earlier this year (return: 1.6 billion euros) and an agreement with the investment company Apollo (500 million) have been used by the group to repay the French aid. This has now happened for 60 per cent.
If Air France-KLM has refunded at least 75 percent, all business restrictions will expire. Then the group can make takeovers again – European aviation is waiting for a consolidation and takeover, experts say – and then the company can pay bonuses to the board again. The Dutch government, a 9.3 percent shareholder, is strongly opposed to multi-million bonuses for, among others, Ben Smith.
KLM still has to pay 1.5 billion euros to the Dutch tax authorities. That’s how much tax deferral the company got. KLM will refund from October.
1.34 billion euros
The additional fuel costs. A figure that Marjan Rintel has a little grasp of, but is confronted with. Air France-KLM had to spend no less than 1.34 billion euros more on petroleum in the second quarter of 2022 than in 2021. In total, fuel costs were 1.86 billion euros. Back then, of course, significantly less was flown, but the petroleum costs in 2019 were also significantly lower than now. Two years ago, according to the international aviation organization IATA, kerosene still cost around 40 euros per gallon. barrel; now it’s about 100 euros more.
Air France-KLM and many other airlines usually try to brace themselves against large fluctuations in the price of oil. For this purpose, the long-term contracts (cover) with oil companies. The airline has hedged 71 percent of its expected fuel for the third quarter. For the fourth quarter, it is only 57 percent.
KLM is looking for at least a hundred more employees at Schiphol, said Marjan Rintel. She has hired 150 new people in recent weeks. Like Air France, KLM has made significant cuts to its staff.
The company is cutting 13 percent of its workforce and now has 28,000 employees. “The numbers are good,” Rintel said. “But we must hold fast to the structural costs. This is very important for KLM’s financial health and to be able to continue investing in sustainability and the product for our customers.”
Despite this, KLM agreed a generic pay rise with all staff in May. All employees, from check-in staff and baggage porter to pilot, will receive an additional 5 per cent.
Jeroen Kremers was critical of it: “For the money you give one pilot a 5 percent pay rise, you can also give ten ground staff 5 percent more.” You could say it was a gift from outgoing CEO Pieter Elbers, while his successor Marjan Rintel may now be faced with painful measures. KLM will need to limit its structural (personnel) costs to remain competitive against IAG, Lufthansa, easyJet and Ryanair, among others.
A version of this article also appeared in the newspaper on 30 July 2022