In Europe as in the U.S., the jet age is a convenience to passengers and a financial headache to the airlines. Between the high costs of the switchover to jets and the bitter competition for passengers to fill the bigger jets. West Germany's Lufthansa last year lost about $25 million, Scandinavia's SAS about $17 million, and Britain's BOAC at least $28 million. Latest victim of the jet squeeze: The Netherlands' KLM, one of Europe's few privately managed airlines, and long among its most profitable.
Last year KLM showed a loss of $21 million, the biggest in its 42-year history. This year, with losses up to $11 million in the first quarter alone, KLM's prospects look worse. Declaring that "our existence as a major airline is at stake," KLM President Ernst van der Beugel recently announced to his 17,300 employees plans to cut costs by 13%—largely by lopping 2,000 people off the payroll. This week the Dutch Parliament will take up Van der Beugel's desperate request for a government guarantee of $104 million in new bank loans for KLM, and an immediate $14 million loan to keep it from running out of cash.
Though Van der Beugel will probably get the money, his appeal is KLM's biggest break yet with its tradition of stubborn independence. An even greater break may be in the making. Four years ago, the principal Common Market airlines—Lufthansa, Air France, Alitalia and Belgium's Sabena—began to discuss pooling of their resources in a European Air Union in order to compete more effectively with Pan Am, TWA, and other international lines. KLM walked out after the first meetings in disgust at its proposed share of the combined revenues. But Dutch parliamentarians are unlikely to be willing to subsidize KLM permanently for the sake of national prestige, and Van der Beugel now says that KLM is watching the Air Union negotiations "with great interest." Translation: Won't you please invite us back, fellas?