KLM ROYAL DUTCH AIRLINES TO REDUCE WINTER CAPACITY FURTHER STILL

Cuts to Affect 2,500 Jobs

On September 19, KLM Royal Dutch Airlines announced it would be reducing capacity by 5 percent. Following the developments in demand, specifically in the passenger market, this reduction will be increased to 15 percent, in terms of available seat kilometers, and compared to the capacity level in September. The reduction in capacity is to take effect on October 28, 2001, the first day of the winter schedule.

The cut-back will be achieved by deploying smaller aircraft and cutting frequencies. The planned approach will hold KLM’s air freighting capacity at much the same level as before. The reduction corresponds to the capacity of approximately four intercontinental widebody aircraft and three of KLM’s European fleet units.

Impact on Work Force

The further reduction of winter capacity announced today, coupled with the suspension or termination of a wide range of projects and activities will impact approximately 2,500 jobs, or their full-time equivalents, at KLM. Contracts for a fixed period will not be renewed. Hirings from external companies will be practically entirely ended. The company will apply to the Social Affairs Ministry for authorization to put approximately 12,000 employees working in or based on the Netherlands on short-time. KLM has also asked unions and employees for a substantial pay cut. More far-reaching measures may have to follow in view of the uncertainty on further developments in the global airline industry.

Reducing Capacity

The reduction of KLM’s capacity will specifically affect North Atlantic routes. The number of weekly flights jointly operated by KLM and Northwest Airlines will decline from the September figure of 188 to 163 at the end of October. The number of scheduled flights operated per week on Middle Eastern routes will also be reduced.

Consequently, European services will be reduced by 6 percent. Service to Malmo will be withdrawn, and frequencies reduced on services between Amsterdam and cities including Paris, Milan, Madrid, Munich, Gothenburg, and Helsinki.

The overall number of KLM’s weekly roundtrip flights to the Asia Pacific region will be cut from 58 to 53. One weekly flight on Mid-Atlantic routes will be cut, leaving 27 roundtrip flights operated weekly. Cargo capacity will be maintained, in accordance with demand on the market, at the levels planned for most routes in the coming winter season.

Changes to Service

KLM will be adjusting service levels on short-haul European flights, specifically targeting a more sober service in Economy Class, as one component of this essential cost-saving program.