Bas Brouns (KLM): ‘Our main aim is increasing the margin’

You have been working at KLM for almost 30 years. Did you ever consider there to be something more fun to do outside of KLM?
‘I have often thought about it. But KLM is a company where you create your own opportunities, and you also get them. Every time I thought that I might have a look outside to develop myself, another opportunity came along which made me think that given this, I will develop completely different skills, so let me try it. Ultimately, I find KLM a truly wonderful company.’

What challenges do you face as a CFO and how do you deal with them?
‘It is challenging on a personal level. With this step came a significant increase in the amount of work I have to do. A CFO is expected to also deal with various non-financial matters. And I like to go out on the work floor. You can, for example, occasionally still find me in the baggage hall or on the platform, where I help out. All very useful, but also time-consuming.
The challenges that KLM faces have become common knowledge. We need to get our improvement program, which is intended as a first step towards financial health, off the ground. This program has a focus on structural changes instead of one-off savings, to enable us to finance fleet renewals and sustainability initiatives. After corona, things went reasonably well, but now we need to accelerate. A complicating factor is that KLM is a conglomerate, consisting of divisions each facing their own challenges. The challenges in the cabin division are related to workload and absenteeism. Ground services and baggage hall are physically challenging professions. Maintenance deal with questions such as how to utilize IT to make maintenance predictable, or how to deal with a shortage of mechanics. We cannot have the same approach everywhere. But when the plane takes off, everything has to function as a unit.’

What external challenges do you see as significant?
‘One of the challenges is geopolitics where we do not know what trade tariffs and other restrictions will do. The fuel price also remains an important factor that influences results. The aim is to be less dependent on such external matters. Regulation in the Netherlands itself also presents a challenge, with discussions about capacity at Schiphol and taxes on long-haul flights.
The political landscape has changed. What I find difficult is the one-sided view of Dutch politics on Schiphol’s hub function – mainly focusing on costs, and less on the benefits. As CFO, I continue to explain the importance of KLM’s network and Schiphol’s hub function. It takes decades to build a fine-meshed network, but you can destroy it in no time. And it is an illusion that shrinking Schiphol is possible without loss of prosperity.’

How important is the Dutch domestic market for KLM?
‘The fine-meshed network that KLM serves from Schiphol is not only intended for the Dutch market. It works as a hub-and-spoke system, which means that passengers from all over Europe, Africa and other regions transfer via Schiphol to their final destination. A passenger from Africa who has to go to Colombia will often fly via Amsterdam because there is no direct connection. We call this natural flows over natural hubs – the logical flows through logical nodes.
Schiphol’s strength is that it was designed with a single terminal, which allows passengers to transfer easily without having to take trains or visit other buildings. This allows us to offer short connection times, which is attractive to particularly business travellers.’

Are the current cost-saving measures fundamentally different from previous rounds of cutbacks?
‘Our €450 million improvement programme is broader than only cost savings. We have defined a number of pillars. Firstly, productivity, making the organisation more efficient and taking measures to improve productivity. Secondly, income. We are developing new products that passengers are willing to pay for. Thirdly, we are taking a more critical look at investments, for example whether KLM itself should still invest in the catering branch or whether a better outcome can be achieved by outsourcing it.
An important difference from previous programmes is the increased focus on cash flow. Previously, we focused mainly on operating profit, but my experience is that people understand it better if I keep it simple and explain that more money has to come in than what goes out. I have established a clear financial framework, called ‘three by two.’ We are aiming for €2 billion in liquid assets, €2 billion in equity and €2 billion in net debt. This balance will give us the resilience to withstand eventual crises. At the moment, we are not meeting these targets, and some indicators are moving in the wrong direction. Our margin in 2024 was only 3.3 percent – ​​well below where we need to be. Our goal is to achieve an eight percent margin between 2026-2028, in line with the Air France-KLM Group target.’

You recently proposed a zero percent wage increase. How did employees respond to that?
‘A key part of our improvement program is indeed the collective labor agreement negotiations. I understand that the proposal for a zero percent wage increase is difficult for employees, but since 2019, labor costs have increased by twenty five percent. That makes this pause now inevitable.
My role is to explain this story to the works council and unions, considering the different ‘blood groups’ within the company – from baggage colleagues to aviation technicians and IT specialists.’

KLM is facing an investment of seven billion euros for fleet renewal. How are you going to finance that?
‘The intention is to finance the investments from the operational cash flow, which is too low. As a result, we are eroding our cash position. That is not dramatic in itself, but in the long term we do need to increase that operational cash flow.
In order to finance the investments, we first need to implement the improvement programme that should ultimately bring the margin to eight percent. With that margin, you have a positive cash flow with which you can finance the investment agenda. Secondly, we are critically examining all our investments. For example, we divest real estate to reduce our investments. With fleet investments, we investigate whether we should rent or buy or apply a sale-and-leaseback for more flexibility. So, we employ a combination of measures: initiating an improvement programme and looking critically at investments. We scrutinise investments above 50,000 euros. So even if someone wants to renovate a washroom, that is critically evaluated.
In all of this, compliance and safety always have priority, followed by fleet renewal, because that has a positive effect in many areas: fuel efficiency, emissions, noise, customer experience and working conditions.’

Do you see opportunities for artificial intelligence within KLM? And particularly in finance?
‘In catering, for example, we can use AI to predict customer needs, which results in significant waste reduction. These are classic applications that we are already testing. AI applications within finance are still in its infancy, but I do have the ambition to better integrate technology. We have an enormous amount of data within KLM that we can do more with.
Within our IT department, we have blue labs, a kind of testing ground where people develop AI projects, among other things. I see the evolution of finance professionals, from traditional accountants to business partners and ultimately to value creators with the help of technology. AI also has huge potential in customer contact and maintenance. Will we see autonomous aircraft in the future? Not at the moment, in any case. At KLM, safety is the first rule.’

You recently rolled out premium comfort, a cross between economy and business class, on long-haul flights. How has that product been received?
‘Premium comfort has become an extremely successful class, which is popular with business travellers who do not always want to fly business class because of the costs but who wants to travel comfortably on long flights. And with holidaymakers who want more comfort. It is now an important source of income for us and fits in with our strategy to invest in customer experience.
Another product that we are currently testing is paid catering on European flights. Passengers will still be offered a limited complimentary selection, but there was also a need from the customer for more choice, for which they are prepared to pay. This fits in with our strategy to tap into new sources of income while improving the customer experience.’

In recent years, there seems to have been a turnaround. KLM traditionally performed better financially than Air France, but now it is the other way around. What explains this?
‘During the corona crisis, the French government took different measures than the Dutch. Air France employees remained employed, while we had to let go one in six employees as part of the restructuring that was a condition for state aid. In addition, Air France started its improvement program earlier than we did. After the crisis, air traffic picked up very quickly. Experts had predicted that everyone would work via Teams, but both in business and leisure air travel increased much faster than expected.
Another expectation was that European flights would recover faster than long-haul flights, but we saw exactly the opposite. Air France was able to increase its capacity faster than we did. Our biggest challenge now lies in long-haul capacity, with our capacity still far below the pre-corona level. We are at 85 percent of the desired capacity, while most competitors are already higher. The biggest challenge now is the availability of aircraft. In addition, we have to retrain pilots. KLM has four fleet programs running simultaneously. We have the inflow of Embraers at Cityhopper, in Europe the Airbus A321 that will replace the Boeing 737, next year the A350 that will replace the 777-200 and A330 and at the cargo division the replacement of the current fleet. For this, about a third of our pilots have to be retrained, and they can of course not be available during the retraining. In addition, we have had to fly around Russia for two years, which requires additional flight capacity.’

What is your leadership style and how does it differ from your predecessor?
‘I strongly believe in authenticity and transparency. I think it is important to empower people and to give them autonomy. That allows them to flourish, and it leads to better results. I ask for a lot of feedback, listen extensively and talk with as huge a number of employees as possible to avoid getting tunnel vision. I may be more demanding than my predecessor, especially when it comes to expectations of finance professionals. I expect them to not only understand management accounting, but also cash flow and IT. If a finance professional ever wants to work outside KLM, he or she needs a broad set of skills.
In addition, as I said, I spend a lot of time on the work floor. By regularly visiting divisions and helping with operational tasks, I create connections with employees and receive direct feedback. This helps me to make abstract concepts such as productivity improvement concrete for the people on the work floor.’

If we look three years ahead, what specific financial objectives do you hope to have achieved, and what indicators can we use to determine whether your current course has been successful?
‘The main aim is to increase that margin from 3.3 percent to eight percent. Our €450 million improvement program should make that possible. I am confident that we are on the right track with our ‘three by two’ target – 2 billion cash, 2 billion equity, 2 billion net debt – and our improvement program. The beauty of our challenge is that we already see our improvement initiatives delivering results. In 2024, the operating result increased by 400 million, largely thanks to the improvement program. So, it works, and we need to continue that trend. Although it seems that KLM is not made for quick growth. Before corona, we grew by two percent in seat capacity per year, while we now need to grow by five to six percent per year. Ultimately, that will only succeed if Schiphol can maintain and strengthen its hub function. I have now been working at KLM for thirty years and have seen how a fine-meshed network has been built up over decades. We should cherish that, because it is much easier to break it down than to build it up again. That is the message I will continue to convey on behalf of KLM.’

Interview by André van IJperen, Partner at Deloitte. Published in Management Scope 05 2025.