KLM

Koninklijke Luchtvaartmaatschappij
Quick Facts
Type	Private, limited public tradable
sector	Aviation
Headquarters (Benelux Organization)	Amstelveen, Netherlands
Year of Origin	1919
Emissions (All Scopes)	17,3 Megatons of CO2 (2019)
Total Revenue	11,075 billion euro (2019)
Stock Exchange	Euronext Paris & Amsterdam (Air France-KLM)
Key People	Pieter Elbers (CEO) Erik Swelheim (CFO) René de Groot (COO)
Number of Employees	32.667
Subsidiaries	Transavia Martinair KLM itself is a subsidiary of Air France-KLM

Royal Dutch Airlines, stylized as KLM, was founded in 1919 and is active in cargo and passenger transport. KLM offers a network of 92 european and 70 intercontinental destinations. Pre-corona (2019), KLM transported 34,1 million passengers and 621000 tonnes of cargo. The headquarter of KLM is located in Amstelveen. In 2020, KLM Group employed 32.667 people. KLM claims to be the largest private employer in the Netherlands. In 2020, KLM’s revenu was 5,120 billion euro’s, sharply contrasting to 11,075 billion in 2019. KLM’s made a loss of 1,546 billion euro’s in 2020, contrasting to a 0,449 billion euro profit in 2019. Air France and KLM Royal Dutch Airlines are the biggest European Airline Group since 2004. The balance sheet value of KLM is 10,447 billion in 2020. In 2019 this was 11,771 billion.

Company Structure

Koninklijke Luchtvaart Maatschappij N.V. (“KLM”) is a non-listed, limited liability company incorporated under Dutch law. Supervision and management of KLM are structured in accordance with the two-tier model, meaning a Board of Managing Directors supervised by a Supervisory Board.

KLM is a subsidiary of a holding company it shares with Air France, AIR FRANCE KLM S.A. This holding company has a board of directors of 19 members, of which five are Dutch. One of those five is appointed upon nomination of the Dutch government, and two upon nomination by the KLM supervisory board. One member is the chairman of the KLM Supervisory Board. The fifth joined as Director representing employees. The KLM CEO is a permanent supervisor to the Board meetings.

Since the merger of KLM and Air France in 2004, the separate KLM shares have disappeared from the stock market and were replaced by Air France-KLM shares. AIR FRANCE KLM (the holding company) holds all KLM priority shares, and a proportion of the common shares that together make up 49 percent voting rights in KLM. Also it holds depository receipts issued by Stichting Administratiekantoor KLM and Stichting Administratiekantoor Cumulatief Preferente Aandelen C, which holds different kinds of preference shares. These preference shares do hold voting rights, but no economic rights. The Dutch Government directly holds cumulative preference shares A, of which the depository receipts are held by Stichting Administratiekantoor KLM, corresponding to 5,92 percent of the voting rights in the KLM shareholder meeting. In 2019, the Dutch Government bought 14 percent of Air France-KLM shares on the stock exchange in order to level the influence of the French State on Air France-KLM (both around 14 percent of shares).

However, since the French government gave support to Air-France KLM for a large part in the form of buying shares during the corona pandemic, their share has risen to about 30 percent of voting rights, whereas the Dutch share has shrunk to 9,3 percent.

Board of Directors

Executive Board

Name	Function	Remuneration x1000 EUR
Pieter Elbers	Chief Executive Officer	722
René de Groot	Chief Operations Officer	495
Erik Swelheim	Chief Financial Officer	474

Together they earned 1,7 million euro’s in 2020, in contrast to 2,8 million in 2019. This reduction has to do with voluntary pay-cuts due to the corona-situation, as well as conditions by the Dutch Government to the state loans to KLM during Covid-times.

Executive Team

Executive Team

Name	Function
Barbara van Koppen	General Council & Corporate Center
Ton Dortmans	Engineering & Maintenance
Jacomijn Dijkstra	Transformation
Boet Kreiken	Customer Experience
Paul Terstegge	Inflight Service
Ralph Albus	Chief of Staff
Bas Gerressen	KLM Netherlands
Vincent van Hooff	Flight Operations
Aart Slagt	Chief information officer & information systems
Adriaan de Heijer	KLM Cargo
Marian Kartman	HR & Industrial Services

There is no information available on the individual remuneration of the executive team.

Supervisory Board

Supervisory Board

Name	Function	Remuneration x1000 EUR
Cees 't Hart	Chair	38,542
Francois Enaud	Vice-chair	24,408
Mary de Gaay Fortman	Member	24,908
Jan Kees de Jager	Member	26,008
Christian Nibourel	Member	15,164
Fleur Pellerin	Member	26,008
Francois Riolacci	Member	28,806
Benjamin Smith	Member	0
Janine Vos	Member	23,408

The Dutch Government appointed a State Agent to monitor the execution of KLM’s restructuring plan as a condition to the Covid-loans KLM received. This Agent can attend all meetings of the supervisory Board and the Audit Committee, but is not part of this supervisory Board.

Accountant

The external accountant of KLM is KPMG Accountants N.V. and Deloitte Accountants B.V.

Main Activities

KLM offers a network of 92 european and 70 intercontinental destinations. Pre-corona (2019), KLM transported 34,1 million passengers and 621000 tonnes of cargo.

KLM is partner in the so-called SkyTeam Alliance which offers 1063 destinations in 173 countries. KLM has eleven daughter companies, one jointly controlled entity and one financial asset. Two daughtercompanies are airlines: Transavia and Martinair. Transavia operates from Amsterdam, Eindhoven and Rotterdam and transported about 9 million passenger in 2018. KLM has merged with Air France in 2004, and works with different layers of operations consisting of Air France KLM-Group, Airlines and Core Activities.

Government

KLM received Royal status before it was officially founded, contrary to the official guidelines. In 2012, the royal status of KLM was prolonged for 25 years, meaning that according to the Dutch State, KLM is prominent in its sector in the Netherlands, its governance is impeccable and the management is without any controversy. In all of the individual tranches of NOW-support during corona times, KLM was the largest recipient with an estimated total of 1,7 billion euro’s.

The Dutch state has always stressed the importance of the network of KLM for the Dutch economy. It did so when it bought for 744 million euro of KLM shares in 2019. It also did so when explaining why the billions of state support for KLM during corona times were justified. However, more and more research points out that the function of Schiphol as economical hub of the Netherlands, and with it the network of KLM, is largely overstated in terms of economical importance. A research done by ESB, an important economic trade magazine states that Schiphol and KLM are more reliant on Amsterdam than that Amsterdam and the rest of the Netherlands is reliant on them. The general conclusion seems to be that a less prominent Schiphol and KLM does not necessarily have negative economic impacts, the effects might very well be positive in the long-term. It would however for sure have positive consequences for the climate, the government expenses and the neighboring villages surrounding Schiphol airport.

Paris Agreement until Today

KLM claims to be a sustainability leader in the airline industry since launching its Fly Responsibly initiative in 2019. KLM claims to have reduced its CO2-eq. emissions by 4 percent since 2005 and 31 percent per passenger per kilometer as per 2019. These claims cannot be verified as over the base year 2005, KLM only reports emissions for the entirety of Air France-KLM. Excluding daughter companies and excluding non CO2 potential warming effects. From this data the initial emissions in 2005 cannot be calculated.

KLM plans to incentivize customers to offset their CO2 emissions through the CO2ZERO-program. This may seem like a good solution to have customers carry part of the cost of their impact to the environment, but there are problems to it.

• A tree needs to survive a hundred years in order to be able to actually caption the carbon that is being ‘’offset’’;
• The market for offset carbon is self-regulation, and therefore susceptible to abusive practices. The wages being paid to the people actually planting the trees are too low, even by local standards;
• The rights of local people, who have traditionally accessed the forests where new trees are planted for plants, firewood and building materials are not taken into account;
• carbon stored in trees or biological carbon is not equivalent to fossil carbon, as it will be released back into the atmosphere through fire, natural decay or harvesting;
• On many places where western organizations plant trees, earlier destroyed forests are rebuild. It is questionable to state these are ‘’extra’’ trees that store carbon from western industries. In the first place, they store carbon that was released by the earlier destroying of the forest.

So far, the offsetting of carbon seems nothing more than an administrative trick.

KLM wants to be the launch customer of Europe’s first SAF (Sustainable Aircraft Fuel) plant, that will be developed within the Netherlands as announced in 2019. KLM commits itself to use 14 percent SAF of the total volume used in the Netherlands by 2030. Besides KLM’s commitment, it has also been one of the conditions for state loans during the COVID period.

Financial Results since 2015

In this table you can see the financial situation of KLM since 2015. Yearly results are very volatile.

Financial situation

Year	Revenue	Profit	Dividend
2015	9.9 billion EUR	54 million EUR	0 EUR
2016	9,8 billion EUR	519 million EUR	16,8 million EUR
2017	10,34 billion EUR	703 million EUR (loss)	0 EUR
2018	10.96 billion EUR	573 million EUR	18,5 million EUR
2019	11 billion EUR	449 million EUR	19.4 million EUR
2020	5,1 billion EUR	1,5 billion EUR (loss)	0 EUR
2021	XXX Billion EUR	XXX EUR	XXX EUR

In addition to these numbers, it must be noted that ever since its inception, KLM hardly made a profit. During times of hardship, it has always been the Dutch state and therefore taxpayers that have saved KLM with monetary injections.

Scandals and controversies

In April 2022 the NGO Transport&Environment revealed KLM-AF lobbying efforts to reduce the impact of the European Fitfor55 legislation. If successful, the lobbying effort of KLM would significantly reduce their obligations to stop dangerous climate change.

Current Emissions

In their annual reports, all KLM emissions goals are mentioned in percentages. Nowhere in the annual report are emissions mentioned in hard numbers. There is only limited data on KLM emissions publicly available. KLM only has a duty to report emissions of intra-EEA flights as laid out by the provisions of the EU ETS. Emissions from flights to and from destinations outside Europe are not covered by the EU ETS and so are not reported. Due to the limited available data it is not possible to calculate the amount of emissions of KLM in Dutch airspace.

Dutch airlines emitted 13mton of CO2 in 2018, including emission outside of the Dutch airspace. KLM has the largest share in this. According to the Emission Trading Scheme (ETS) KLM emitted 1,7 mton on intra EEA-flights, which was 64,4% of the total Dutch emission under ETS. The largest share of KLM-flights is intercontinental and therefore does not fall under the ETS registration system. Corresponding the share of KLM in the Dutch emission under ETS to the presumed share of KLM in total airline emissions in the Netherlands corresponds roughly to the 8,6 mton emissions as calculated by CE Delft. CBS does not provide an overview of all aviation-caused CO2 emission in Dutch airspace.

In the numbers KLM reports, the global warming effect of non CO2 high altitude emissions are not reported. These non CO2-effects, such as persistent contrails, aviation induced cirrus and NOx derivatives contribute significantly more to global heating than aviation CO2 emissions. Recent studies conclude that, because of the non CO2 climate effects, today's total climate impact of aviation is about three times greater than the impact of CO2 alone.

The numbers in the following table exclude daughter companies as Transavia, Martinair and cargo transport.

Greenhouse Gas Emissions Performance Data

Year	A: Grams CO2 p.p.p.km,	B: Revenue Passenger km (millions)	C: Total In Flight CO2 emission reported (megaton)	D: Climate COntribution non CO2-effects (twice C)	F:Total CO2-eq. emissions (C+D)
2015	86	93228	8,0	16,0	24,0
2016	84	97737	8,2	16,4	24,6
2017	82	103487	8,5	17	25,5
2018	80	107676	8,6	12,2	25,8
2019	79	109476	8,6	17,2	25,8
2020	101	33873	3,4	6,8	10,2

According to KLM-Air France, 99,7% of the total emissions of Air-France or KLM are direct scope 1 emissions. According to the greenhouse gas protocol, KLM should include in its scope 2 report emissions derived from the combustion of fossil fuels to produce electricity that is consumed in a vehicle. In its scope 3 report it should at least include:

• Category 4: upstream transportation and distribution;
• Category 6: business travel;
• Category 7: employee commuting;
• Category 9: downstream transportation and distribution.

Air France-KLM admits that these emissions occur in their operations. Air France-KLM claims to report 100 percent of its scope 1 & 2 emissions and emissions from upstream phase of kerosene production (scope 3). This is however only done on group-basis, and not separately for KLM operations.

In its own emission reports, KLM does not take into account the upstream production and transport of kerosine. Production and transport emits about 0,5 kg of CO2 per kg of jet fuel. For every 36 passenger kilometers, KLM needs 1 liter of kerosine. 1 liter of kerosene weighs 0,8 kg.

• Passenger kilometers KLM 2018: 107 676 million;
• 1 liter of kerosene per 36 passenger kilometers;
• 1 liter of kerosene weighs 0,8 kg;
• The production and delivery of 1 kilo of kerosene results in 0,5 kg CO2-emission;
• So: the total amount of passenger kilometers (107 676) divided by the amount of kilometers made with one liter of kerosene (36) means that a total of 2 991 million liters of fuel has been used in 2018. As mentioned, one liter of kerosene weighs 0,8 kg, hence the total amount of kerosene (2 991) times the weight per liter (0,8) totals to 2 393 million kg kerosene. The production and delivery per kilo results in 0,5 kg CO2 emissions. So, 2 393 million kg of kerosene times the amount of CO2 emissions released to produce and deliver it (0,5 kg) results in a total of 1 196 million kg CO2 being released. Rounded off, this results in 1,2 Mt.

These emissions for production and delivery should be added to the scope 1&2 emissions. The climate impact of the emissions attributable to KLM are therefore 25,8 + 1,2 = 27 Mton CO2e.

Climate Policy and Plans

KLM’s ambition is to have zero emissions from ground operations by 2030. 62 percent of the ground equipment is already electric. This covers only a minimal portions of the total emissions. KLM cooperates with the Dutch government and NS to investigate how more short flights can be replaced by high-speed trains. The company has already replaced one of the five (!) daily flights to Brussels with a train journey.

KLM claims to have reduced absolute emissions numbers by 4 percent since 2005 and by 31 percent per passenger per kilometer as per 2019. As mentioned before, these numbers cannot be verified. KLM’s goals for 2030 are to reduce total emissions from flight operations by 15 percent and emissions per passenger per kilometer by 50 percent. It cannot be calculated what this means in absolute numbers, but from the emission data since 2015 the conclusion can be drawn that KLM is not on track to meet these targets. KLM has not published a plan or pathway to meet these targets, except for the following statement:

KLM plans to reach its targets by fleets renewal, improved procedures, engagement, support of research and cooperation with authorities.

KLM strives to create sustainable growth on Amsterdam Airport Schiphol and gain access to every market that complements and increases the quality of its network. It is hard to see how this aligns with the reduction targets.

Due Diligence

Keep the broader context in mind. Is the company integer when it comes to deforestation, palm oil, biodiversity, human rights etc etc? Be critical in the sources used here.

Conclusion

KLM is the one of the major european players in aviation. The corona crisis has shown the vulnerability and lack of sustainability of the business models of players like KLM. KLM is partly french, partly Dutch, and partly government owned.

KLM mentions their emission data only in relative numbers, but our calculations show that the numbers are enormous. KLM makes no mention of non-CO2 climate effects, while in aviation they can amount up to three times as much as CO2 effects. Some of the 2030 goals of KLM are of a very small scope, for example electrifying ground equipent. Others are nearly impossible to reach, if seen in the perspective of historical accomplishments. The reduction goals KLM has set are directly copied from the conditions to the state loans KLM received during corona times.

A more proactive stance may be expected from KLM. In their reports they don’t seem to be taking sustainability and climate change too serious, seen as they would like to grow their destinations and tap into untapped markets. Without a clear reduction plan, this is not possible considering their current emissions.