(Bloomberg) -- Dutch flag carrier KLM NV will postpone or cancel previously planned investments, and consider selling non-core operations as it looks to slash costs.
The carrier, owned by Air France-KLM, expects the measures to improve its operating result by €450 million ($497 million) in the short term and lead to a profit margin of over 8% in 2026-2028, it said in a statement Thursday.
Air France-KLM’s shares rose as much as 2.3%, and were 1% higher at 9:51 a.m. in Paris.
Higher costs of equipment, staff, airport charges and delays in aircraft deliveries have crimped the forecasts of several European airlines this year. Air-France KLM cut its capacity outlook for the year and began a hiring freeze in July, while rival Deutsche Lufthansa AG also lowered its profit outlook and kicked off a cost cutting plan to counter falling ticket prices and a slow rebound in corporate travel since the pandemic.
KLM on Thursday said it will operate fewer flights due to a shortage of technicians and supply problems of parts. It is taking measures to reduce the number of cancellations and may examine partly outsourcing maintenance.
The other measures include reconsidering and postponing investments such as plans for a new head office and engineering & maintenance buildings. It also seeks to prune costs by reorganizing its flight services and training organizations, the company said.
The move is designed to help KLM realize its planned investments in fleet renewal. The airline has previously outlined plans to invest €7 billion in renewing its fleet over the next few years. It intends to replace its older Boeing Co. 737s with Airbus SE A320neo and A321neo aircraft for European routes.
The carrier is also exploring divesting or terminating activities that “do not directly contribute to the operation of flights,” it said without presenting details.
(Updates with details, share move)
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