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KLM blames job cuts on war, virus

KLM is expected to announce a loss for this year.
KLM is expected to announce a loss for this year.

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AMSTERDAM, Netherlands -- Dutch airline KLM said on Tuesday it planned to cut thousands of jobs as the Iraq crisis and concerns over the SARS virus cut into its revenue.

Europe's fourth largest airline, which has more than 30,000 employees, said it wanted to reduce costs by 10 percent through job cuts and other measures but did not provide details of the cutbacks.

KLM said air travel had been hurt by war fears and the outbreak of SARS, or severe acute respiratory syndrome, which has affected almost 1,900 people in at least 15 countries. There have been 63 deaths so far. (Full story)

"In view of the current world developments, KLM Royal Dutch Airlines will soon implement far-reaching measures to effect a direct improvement in results," the carrier said in a statement.

"The exact short-term consequences will only become clear in a couple of weeks. Based on an interim inventory of longer-term initiatives, KLM expects to cut several thousand jobs."

"On the short term, KLM is intensifying its company-wide focus on reducing costs and is aiming to maximize its cash position. Furthermore, the company is initiating an employment stop and will re-evaluate all planned investments," it said.

The airline saw its load factor, based on available capacity, fall to 77.9 percent in February and it has warned that it could post an operating loss for the fiscal year ended March 31, 2003. Those results are due in early May.

"KLM believes that the aviation sector will have to improve its results if it is to survive. In the past 10 years, the average returns have fallen below two percent annually," it said.

KLM shares were down 1.7 percent to 5.64 euros in afternoon trading on Tuesday in Amsterdam.

On Monday, Germany's Lufthansa announced a cost-cutting program, but did not give any details.

Last month, British Airways said it would eliminate more jobs because of the slump in air travel and the Iraq crisis, while Switzerland's national airline Swiss said it was reviewing its business plan.

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