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. KLM’s network of intercontinental destinations is said to be important to the Dutch economy and employment. KLM and Schiphol guarantee good accesibility and therefore serve a broader public interest, according to the Dutch minister of Finance. 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 twotier 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 seperate KLM shares have dissappeared 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 inmpeccable 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.

Paris Agreement to Today

KLM claims to be a sustainability leader in the airline industry since launching its Fly Responsibly initative in 2019. KLM has reduced its CO2-eq. emissions by 4 percent since 2005 and 31 percent per passenger per kilometer as per 2019. The goals for 2030 are to reduce these levels by 15 and 50 percent respectively. The 50 percent reduction of CO2 emissions per passenger per kilometer is not only a target by KLM, but also a condition to state loans during COVID times.

KLM’s CO2ZERO program enables passengers to compensate their CO2 emissions. In 2020 51,053 ton CO2 eq. was offset in this way. KLM remains committed to being the launch customer of Europe’s first and dedicated 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	9,905 billion EUR	54 million EUR	1 million EUR
2016	9,8 billion EUR	519 million EUR	5 million EUR
2017	10,340 billion EUR	703 million EUR (loss)	18 million EUR
2018	10,955 billion EUR	573 million EUR	1 million EUR
2019	11,075 billion EUR	449 million EUR	19 million EUR
2020	5,120 billion EUR	1,546 billion EUR (loss)	19 million EUR
2021	XXX Billion EUR	XXX EUR	XXX EUR

Scandals and controversies

Any dirt on the companies can be added here.

Current Emissions

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.

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. 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.

In 2018, Air France-KLM had a CO2 emission of 80 grams per passenger per kilometer. The revenu passenger kilometer (RPK) of only the KLM fleet was 107676 million kilometers. The total emission of KLM is therefore 8,6 Mton. This excludes daughter companies as Transavia, Martinair and cargo transport.

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.

Due to the covid-19 crisis, the CO2 emission of Air France-KLM was 101 grams per passenger per kilometer in 2020. In 2019 this was 79 grams. The revenu passenger kilometer (RPK) was 33873 million kilometers in 2020, 109476 million in 2019. The reported emission of KLM is therefore 3,4mton in 2020 and 8,6 mton in 2019, excluding daughter companies and cargo.

In these numbers, the global warming potential of non CO2 effects is excluded. These effects in aviation are estimated to be roughly equal to the warming potential of the CO2 emissions according to CE Delft. Other studies amount the value of this effect to be between a factor one to four. For calculations purposes the average estimation of factor two is used.

Greenhouse Gas Emissions Performance Data

Year	A: Grams CO2 p.p.p.km	B: Revenue Passenger km (millions)	C: Total emission reported (megaton)	D: Warming potential non CO2-effects (equal to C)	F:Total CO2-eq. emissions (C+D)
2015	86	93228	8,017	8,017	16,035
2016	84	97737	8,21	8,21	16,41
2017	82	103487	8,48	8,48	16,97
2018	80	107676	8,61	8,61	17,22
2019	79	109476	8,64	8,64	17,29
2020	101	33873	3,42	3,42	6,84

According to KLM-Air France, 99,7% of the total emissions of Air-France or KLM is direct scope 1 emissions. . There is no report on scope 2 or 3 emissions.

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

KLM has reduced its CO2-eq. emissions by 4 percent since 2005 and 31 percent per passenger per kilometer as per 2019. The goals for 2030 are to reduce these levels by 15 and 50 percent respectively. There is no target for 2050 and no explanation on how to reach the 2030 targets is given.

The reduction targets KLM has for 2030 are directly copied from the conditions to the State loans given out by the Dutch Government.

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 equimpent. 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.