Air France-KLM to Reduce Costs as Shares Surge

Air France-KLM has announced a range of cost-saving initiatives aimed at restoring its EBIT margin to approximately 8% by 2028, a target that aligns with its performance prior to the pandemic.

As of 7:41 AM (1141 GMT), shares of Air France-KLM were trading 3.1% higher at €8.19.

The airline’s strategy includes a focus on increasing staff productivity by 5% by 2025, which is an addition to existing labor agreements. A significant part of KLM’s plan involves outsourcing maintenance operations from its primary hub at Schiphol to various alternative locations. This strategy is anticipated to generate substantial savings while ensuring operational integrity.

Analysts at Citi Research noted that the 8% margin target by 2028 is seen as a step forward compared to their expectations that network airline margins will reach around 7%. Additionally, the airline is looking into new opportunities in on-board catering, which could provide additional revenue streams.