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KLM expects 'significant' loss
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November 1, 2001: 5:00 a.m. ET
Dutch airline may cut more jobs if economic conditions deteriorate
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LONDON (CNN) - KLM Royal Dutch Airlines, Europe's fourth-largest airline, expects a "significant" operating loss this year as economic conditions deteriorate.
A global economic slowdown has hit the airline industry hard, a situation that has been exacerbated by the September 11 terror attacks. More than 100,000 jobs have been lost in the Industry since the attacks as airlines slash cost to keep their planes in the air.
"We foresee a significant drop in passenger revenues for the remainder of the year," said Chief Executive Leo van Wijk on Thursday. "This drop will exceed out short-term ability to reduce costs and will result in a significant operating loss for the year."
KLM announced plans to cut 2,500 employees and has reduced the number of seats it flies by 15 percent, a move achieved by flying smaller aircraft. British Airways, Europe's biggest airline, is axing 5,200 jobs and a 22 percent fall in passenger traffic during September.
"If the situation deteriorates further then there will be further job cuts," Chief Financial Officer Rob Ruijter told Reuters.
The International Air Transport Association has said global airlines will make a loss this year of about $12 billion as airlines report passenger number have fallen by about a third. KLM said its passenger traffic fell 2 percent and the number of seats sold fell 2.4 percentage points to 82.1 percent.
The Dutch airline said on Thursday net profit plunged 77 percent in the three month to September 30, its second-quarter, to  27 million ($24 million).
Second-quarter operating profit fell to 83 million compared with 201 million in the same period a year ago. Analysts polled by Reuters had expected KLM to post an operating profits of between 49 million and 119 million.
At the operating level, KLM said the September 11 attacks cost it 50 million. Operating expenses rose 4 percent to 1.8 billion in the second quarter, mainly due to higher fuel costs.
Ruijter said: "We think it highly unlikely there will be a fourth airline. Our view continues to be that after consolidation there will be alliances that centre around Lufthansa, BA and Air France."
KLM's merger talks with British Airways collapsed in September last year. The latest troubles could see European and U.S. regulators relaxing rules on mergers and acquisitions in the airline industry.
KLM's stock fell 1.8 percent to 10.20 in Amsterdam morning trading on Thursday. The company's stock has fallen more than 60 percent from a high of 28.90 hit in February and dropped to a low of 7.30 on September 21. 
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