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Thursday, 4 October, 2001, 15:11 GMT 16:11 UK
Dutch airline cuts 2,500 jobs
Amsterdam's Schiphol airport
Job cuts are likely at KLM's Schiphol airport base
Dutch airline KLM has joined the lengthening list of airlines to reveal job and flight reductions.

The airline said it is to shed 2,500 jobs, cut back working hours for another 12,000 staff and ask its employees to accept a "substantial" wage cut.

KLM said it was not in any merger or takeover talks as a result of the industry downturn which was accelerated by the 11 September attack on the US.

"Everybody is busy trying to survive. There are few possibilities to talk with each other about cooperation," chief executive Leo van Wijk told a news conference.

"As far as I am concerned there are no talks. There are other priorities," he added.

No dismissals yet

The job cuts will come from a 15% reduction in KLM's schedules and will be scythed from fixed term contracts. "There is no question of dismissals as yet", said KLM.

"More far-reaching measures may have to follow in view of the uncertainty on further developments in the global airline industry," the Dutch airline said.

Mr van Wijk acknowledged on Wednesday that KLM was already facing "a difficult economic climate" ahead of 11 September.

'Not an excuse'

But he insisted the airline is not using the attacks as "an excuse", saying the severe drop in demand KLM is now facing "has nothing to do with just the economic slowdown but is caused by fear of flying".


If there is a need to cut costs further and to cut capacity further then we would clearly do so

KLM chief financial officer

KLM said the attacks cost it 50m euros (31m, $46m) in lost revenues and damages in September. Overall passenger and cargo loads fell 6.7% to 76.7% compared to September 2000 levels.

Chief financial officer Rob Ruyter said top management would take the biggest paycuts: Board level bosses will lose15% of their salary; middle managers will get 6% less; and most workers 3%.

KLM wants the unions to consider salary reductions that would save about 60m euros (37m, $55m) before the end of its financial year in April.

BA loses passengers

KLM's announcement follows news of a steep drop in passenger numbers at British Airways and the collapse of Swissair - now surviving on a one-month government bailout - and Belgian carrier Sabena.

BA confirmed on Wednesday it has lost one in three of its transatlantic passengers.

Meanwhile, regional carrier BMI British Midland said it was cutting 600 jobs and grounding eight aircraft.

The world's airlines have been under huge pressure since 11 September, with people's reluctance to fly adding to the financial trouble many were already in.

In response, it has asked the unions to consider pay cuts that would save about 60m euros (37m, $55m) before the end of its financial year in April.

Chief financial officer Rob Ruyter said top management would take the biggest paycuts: Board level bosses will lose 15% of their salary, while middle managers will get 6% less and most workers 3%.

KLM 'not going bust'

KLM is not at risk of bankruptcy, according to the chief financial officer.

The company is protected by a "war chest" of up to 1.4bn euros in cash and securities, he said.

KLM will haemorrhage cash in the third quarter, spending more than is likely to come in, he acknowledged.

"If there is a need to cut costs further and to cut capacity further then we would clearly do so", said Mr Ruyter.

Airline analysts said that KLM only has enough cash to survive for a few months, despite having a strong balance sheet, and badly needs to find a strategic partner.

"If you take a look at their (cash) burn rate, 1.1bn euros is not enough to last four to six months and then their problems will start all over again", said Gert Jan Geels of Eureffect fund managment in Amsterdam.

Job losses at BA

Since the attacks, more than 100,000 job losses have been announced by airlines.

BA itself lost 48m in revenue in the two weeks following the attack, and has already taken action to cut costs.

Last week it announced plans to shed 7,000 jobs, and withdrew or suspended 190 of its services, including some transatlantic routes.

BA said traffic was down 36% in the seven days following the attacks on the US, before recovering to be 28% down in the last week of September.

But the many in the City had expected worse news from BA and the airlines shares were up about 5% at the close on Wednesday.

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 ON THIS STORY
The BBC's Pauline McCole
"KLM's decision to cut services and reduce staff is hardly surprising"
See also:

03 Oct 01 | Business
US airlines cut fares to spur travel
03 Oct 01 | England
British Midland cuts 600 jobs
03 Oct 01 | Business
Swissair shares wiped out
03 Oct 01 | Business
Sabena files for bankruptcy
27 Sep 01 | Business
British Airways cuts flights
27 Sep 01 | Northern Ireland
Jobs blow as BA axes London route
27 Sep 01 | Business
Airlines mull security costs
25 Sep 01 | Business
TBI ditched by French suitor
20 Sep 01 | UK
Anger over job cuts
09 Sep 01 | Business
British Airways confirms job cuts
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