KLM says 1,500 new layoffs bringing total job cuts to one in five

In this file photo taken on April 23, 2020 KLM aircrafts are seen at a standstill on the tarmac of Schiphol airport, as the country is under lockdown to stop the spread of the Covid-19 pandemic caused by the novel coronavirus. (AFP)
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Updated 01 August 2020

KLM says 1,500 new layoffs bringing total job cuts to one in five

  • Coronavirus and emissions reduction hit Dutch airline’s bottom line

AMSTERDAM: KLM, the Dutch arm of Air France-KLM, said on Friday that it would cut 1,500 additional jobs as part of a restructuring in which it needs to reduce emissions by 50 percent by 2030 as well as prepare for recovering traffic after the coronavirus crisis.
Parent company Air France-KLM on Thursday reported a €1.55 billion ($1.8 billion) operating loss for the second quarter, with traffic down 95 percent from a year earlier.
KLM said that the new cuts would mean its workforce, which was 33,000 before the pandemic, would be reduced by 20 percent in all by 2022. It did not rule out further cuts.
“In all scenarios, demand is only expected to recover by 2023 or 2024 at the earliest,” CEO Pieter Elbers said in a statement.
The restructuring was aimed at retaining as many “jobs as we can in a responsible manner and repaying loans as quickly as possible,” he said.
By comparison, Air France SA plans to cut 6,500 jobs, or 16 percent of its workforce, through 2022.
The Dutch and French governments have given the two national carriers, which merged in 2004, a combined €10.4 billion ($12.4 billion) in bailout money, in a mix of loans and loan guarantees.
Conditions imposed by the Dutch government include pay cuts for executives and pilots, and a ban on bonuses and dividends.
KLM, while smaller than Air France, contributed more to group profits in the years before 2020, leading at times to friction between the French and Dutch governments.
Traffic is gradually resuming at KLM, although Elbers said that the latest rise in cases in many countries could threaten that.
While most of KLM’s routes have been restored, it said last week it planned to operate 13,000 flights in August, still down 60 percent from the same month a year ago.


Oil giants’ production cuts come to 1m bpd as they post massive write-downs

Updated 10 August 2020

Oil giants’ production cuts come to 1m bpd as they post massive write-downs

  • Crude output worldwide dropped sharply after the market crashed in April

LONDON: The world’s five largest oil companies collectively cut the value of their assets by nearly $50 billion in the second quarter, and slashed production rates as the coronavirus pandemic caused a drastic fall in fuel prices and demand.

The dramatic reductions in asset valuations and decline in output show the depth of the pain in the second quarter. Fuel demand at one point was down by more than 30 percent worldwide.

Several executives said they took massive write-downs because they expect demand to remain impaired for several more quarters as people travel less and use less fuel due to the ongoing global pandemic.

Of those five companies, only Exxon Mobil did not book sizeable impairments. But an ongoing reevaluation of its plans could lead to a “significant portion” of its assets being impaired, it reported, and signal the elimination of 20 percent or 4.4 billion barrels of its oil and gas reserves.

By contrast, BP took a $17 billion hit. It said it plans to recenter its spending in coming years around renewables and less on oil and natural gas.

Weak demand means oil producers must revisit business plans, said Lee Maginniss, managing director at consultants Alarez & Marsal. He said the goal should be to pump only what generates cash in excess of overhead costs.

“It’s low-cost production mode through the end of 2021 for sure, and to 2022 to the extent there are new development plans being contemplated,” Maginniss said.

London-based BP has previously said it plans to cut its overall output by roughly 1 million barrels of oil equivalent (BOEPD) by the end of 2030 from its current 3.6 million BOEPD.

Of the five, Exxon is the largest producer, with daily output of 3.64 million BOEPD, but its production dropped 408,000 BOEPD between the first and second quarters. The five majors, which include Chevron Corp, Royal Dutch Shell and Total SA, also cut capital expenditures by a combined $25 billion between the quarters.

Crude output worldwide dropped sharply after the market crashed in April. The Organization of the Petroleum Exporting Countries agreed to cut output by nearly 10 million barrels a day to balance out supply and demand in the market.