KLM and Schiphol: A National Airline Under a Flight Cap Inside Air France-KLM

KLM Royal Dutch Airlines is a profitable but structurally constrained airline: it earns a 3 per cent margin at a hub that the Dutch government has decided must shrink, inside a Franco-Dutch group in which the French side now makes most of the money. In 2025 the Air France-KLM group reported its first operating result above €2 billion, with Air France contributing €1.36 billion and KLM €416 million on revenues of €20.2 billion and €13.2 billion respectively. In the first half of 2026 KLM’s revenue rose 8 per cent to €6.9 billion and its operating result improved by €92 million to €68 million, helped by €315 million of savings from the Back on Track programme, while Air France’s half-year result fell. The Dutch flag carrier is therefore improving at the moment its French sibling is faltering, yet it does so under a flight cap at Schiphol of 478,000 movements a year, after a 2025 that included repeated ground-staff strikes and a legal fight involving the European Commission and the United States. This article explains how the structure works and what the 2025 and 2026 numbers say. It is part of the Netherlands Company Stories hub.

How is Air France-KLM structured and why does it matter for KLM?

Air France-KLM is a holding company created by the May 2004 merger of Air France and KLM, in which the two airlines kept separate brands, operating certificates, hubs and labour agreements under one listed parent, and the balance of power between Paris and Amstelveen has been contested ever since. The group’s chief executive, Benjamin Smith, a Canadian who joined from Air Canada in September 2018, runs the holding; KLM’s president and chief executive is Marjan Rintel, formerly head of Dutch Railways, who took over from Pieter Elbers in July 2022 and was reappointed for a second four-year term at the April 2026 annual meeting.

The ownership of the holding explains the politics. At the end of 2024 the French state held 27.98 per cent, the Dutch state 9.13 per cent, CMA CGM 8.80 per cent, China Eastern Airlines 4.58 per cent and Delta Air Lines 2.79 per cent. The Dutch stake dates from February 2019, when finance minister Wopke Hoekstra spent €744 million buying shares on the open market to match the French state’s influence, without warning the French government. The purchase did not change how the group is run day to day, but it gave The Hague a seat at the table on strategic decisions, such as the location of the group’s intercontinental growth and the guarantees given to KLM when the merger was agreed, which originally protected KLM’s hub status and Dutch identity.

The financial picture inside the group has flipped. For most of the 2010s KLM was the more profitable airline, with margins of 7 to 9 per cent while Air France struggled with strikes and costs. In 2025 the group’s revenue reached €33.0 billion, up 4.9 per cent, and its operating result €2.0 billion, a 6.1 per cent margin; Air France contributed €1.36 billion of that, a 6.7 per cent margin, and KLM €416 million, a 3.2 per cent margin, roughly flat on 2024. Net income for the group was €1.75 billion, with net debt of €8.4 billion and leverage of 1.7 times EBITDA. In the first half of 2026 the pattern reversed again: Air France’s adjusted operating profit fell by €103 million to €251 million, while KLM’s rose by €92 million to €68 million.

The group is also consolidating. In July 2025 it announced plans to raise its stake in Scandinavian airline SAS from 19.9 per cent to 60.5 per cent by buying out Castlelake and Lind Invest, with closing targeted for the second half of 2026 and the Danish state keeping 26.4 per cent. For KLM the SAS deal brings a third hub, Copenhagen, into the group’s northern European network, which is both a growth opportunity and a potential competitor for the long-haul capacity that Schiphol can no longer grow.

Why is Schiphol capped, and what are the numbers?

Schiphol is capped because a Dutch court ruled in March 2024 that the state had acted unlawfully by failing to protect residents from excessive aircraft noise, and the government responded by deciding, in May 2025, to cut the maximum number of annual movements from 500,000 to 478,000, with a target of reducing the number of severely affected residents by 15 per cent. The decision was taken by the then transport minister Barry Madlener of the PVV, despite a March 2025 opinion from the European Commission that the Netherlands had not properly followed the EU’s Balanced Approach procedure, which requires governments to exhaust other noise measures before restricting operations.

The cap landed on an airport already near the number. Schiphol handled 68.8 million passengers in 2025, still below its 2019 record of 71.7 million, and 477,552 flight movements, up 1 per cent on 2024; it posted a net profit of about €550 million. For 2026 the airport operates under the 478,000 limit while several legal disputes continue, and it expects between 68 and 72 million passengers because airlines are using larger aircraft. The airport’s chief executive, Pieter van Oord, who took the job in 2024 after running the dredging company Van Oord, told Het Financieele Dagblad in November 2025 that Schiphol remains a capacity-constrained airport, and the company announced a €10 billion, decade-long investment plan for a new terminal, modernised piers and more wide-body stands, with construction of the terminal expected to begin around 2032.

The cap turned into an international dispute in 2025. In July, US Transport Secretary Sean Duffy warned that Washington would monitor European governments to ensure they did not impose unjustified operational restrictions, a reference to Schiphol, and that American carriers would be protected. Delta operates 17 daily Schiphol flights and is KLM’s transatlantic joint-venture partner; the United States is KLM’s most important intercontinental market. KLM, Delta, TUI and the airline associations BARIN, Airlines for America and IATA sought to block the reduction in court, and a hearing scheduled for late July 2025 was postponed after new data showed more slots than expected had become available for the winter season.

The irony is that the noise targets are being met largely without the cap. Schiphol’s second Balanced Approach evaluation, published in August 2026, found a 17 per cent reduction in severely affected residents against a 15 per cent target, a 29.8 per cent reduction in sleep disturbance and a 35 per cent reduction in homes within the night-noise contour; only the count of homes within the 58-decibel daytime contour, down 14 per cent, fell short. The main driver was noise-differentiated airport charges, which penalise older aircraft and have pushed the share of the newest, quietest generation to about 40 per cent of movements, a far bigger effect than the ministry had expected. Final figures are due in December 2026, and the ministry and KLM are still negotiating the last target.

What did the 2025 strikes cost KLM?

KLM lost most of a summer of labour peace in 2025 to a dispute with its ground staff, which produced a series of announced, court-blocked and eventually executed strikes that cancelled more than 100 flights in a single morning in September and disrupted 27,000 passengers. The dispute began in June, when the unions FNV and CNV announced a strike for 28 June over pay; a judge blocked it on safety grounds. A second eight-hour strike announced for July was blocked by a court ahead of the summer peak. In September, after KLM signed a collective agreement with three smaller unions, FNV and CNV struck for two hours on a Wednesday morning, 8 to 10 am, and KLM cancelled 119 flights, mostly within Europe, with a further four-hour strike the following week.

The ground staff’s demands were a larger wage increase than the 2025 to 2027 deal offered, recognition for physically heavy work such as baggage handling, and more permanent contracts; FNV said its members felt like second-class employees compared with pilots and cabin crew. KLM’s argument was that its cost base was already uncompetitive. The airline’s pilots had accepted pay cuts through 2025 as a condition of the €3.4 billion state-backed rescue package of 2020, and their 2023 agreement had only narrowly averted a strike; by 2025 and 2026 the wage increases under new collective agreements were part of what the airline described as cost growth it could only partly offset.

The strikes were the visible edge of the Back on Track programme, announced in late 2024 to restore KLM’s margin to the 8 per cent the group expects of its airlines. The programme combines productivity targets, a hiring freeze in non-operational roles, renegotiated supplier contracts, network changes and divestments. In the first quarter of 2026 it delivered €159 million of savings and additional revenue, above expectations, and in the first half of 2026 €315 million, which KLM described as above plan. The airline agreed in April 2026 to sell KLM Catering Services to gategroup, a deal completed on 1 July 2026, and launched a participation programme to develop scenarios for the airline towards 2030. In July 2026 Mathieu Essenberg was appointed chief operating officer.

The lesson is that the airline’s cost dispute is structural rather than cyclical. Dutch wages are among the highest in European aviation, Schiphol’s charges have risen sharply since 2022, and the government has added a departure tax. Against that, KLM’s labour relations are better than Air France’s, and its 2025 strikes, two hours here and four hours there, were small next to the multi-day stoppages that the French airline has suffered.

How did KLM perform in 2025 and the first half of 2026?

KLM’s 2025 was stable rather than strong: revenue rose 3.9 per cent to €13.2 billion, but the operating result was roughly flat at €416 million and the margin slipped 0.1 point to 3.2 per cent, which the group attributed to cost inflation, airport charges and operational disruption. Shareholders approved a dividend of €0.8357 per ordinary share at the April 2026 meeting, which in practice means a transfer to the Air France-KLM parent.

The first quarter of 2026 brought a seasonal loss of €114 million on revenue of €3.0 billion, an €84 million improvement on the year before, driven by capacity growth, a reliable operation and the Back on Track savings, even after extreme January winter weather forced cancellations at Schiphol. Chief financial officer Bas Brouns warned in April that the sharp rise in fuel prices after the Middle East conflict escalated could not be passed on in full to customers, and Rintel said that pressure on results would increase from the second quarter.

The second quarter proved better than feared. KLM’s revenue rose 13.8 per cent to €3.9 billion and its adjusted operating profit edged up €3 million to €176 million, a 4.5 per cent margin. For the half-year, revenue was €6.9 billion, up 8 per cent, and the operating result €68 million, up €92 million, with the 2025 comparison restated under the new IFRS 18 standard. Revenue per seat rose, especially on routes to Asia and to North and Central America; cargo improved on strong Asian demand; engineering and maintenance did more third-party work. Rintel’s comment was that the measures were working but that one good half-year did not make KLM structurally strong.

At group level the fuel shock was severe. Air France-KLM expects a 2026 fuel bill of US$8.9 billion, US$2 billion more than in 2025, with the second-quarter fuel price impact of €804 million about 85 per cent recovered through fares. The group cut its 2026 capacity guidance to 2 to 3 per cent growth and trimmed Transavia’s growth plans; the Dutch low-cost unit Transavia lost €265 million in the first half across its French and Dutch operations, a 16 per cent negative margin, as competition in holiday flying intensified.

What does the Dutch state get from its 9 per cent stake?

The Dutch state’s 9.13 per cent of Air France-KLM gives it influence rather than control: a say on board appointments, a voice in strategic decisions and the ability to object if the group’s centre of gravity shifts further towards Paris, but no veto and, since the 2020 rescue loans were repaid, no financial lever beyond the shareholding itself. The 2019 purchase, which cost €744 million, has lost much of its value on paper as the group’s share price fell through the pandemic and the subsequent capital increases diluted all shareholders.

The state’s real leverage is regulatory. It owns 70 per cent of Schiphol, with the City of Amsterdam holding just over 20 per cent, so it is simultaneously KLM’s landlord, its noise regulator and its shareholder. That combination is why the flight cap is so awkward: the same government that bought shares to protect KLM’s hub is the government that decided to shrink the hub. The cap’s defenders argue that the Netherlands has prioritised the health of the hundreds of thousands of people living under Schiphol’s flight paths over airline growth and that the Balanced Approach results show the noise target can be met. Its opponents, including the business lobby VNO-NCW, argue that a hub airline cannot stand still while Paris Charles de Gaulle, Frankfurt and Istanbul grow.

For the group, the Dutch stake is a complication in any further consolidation. When the state bought in, Air France-KLM’s chairman learned of it from the press. The relationship has improved under Smith, and the 2020 rescue, in which the Netherlands provided €3.4 billion in loans and guarantees to KLM while France provided €7 billion to Air France, was negotiated in parallel. But the question of whether KLM should remain a full-service hub carrier with its own long-haul fleet, or become the group’s northern feeder, has never been settled, and the SAS acquisition will reopen it.

How does the Schiphol dispute compare with other airport caps?

Schiphol is the first major European hub to have a government impose a numerical flight cap for noise reasons, and the dispute has become a test of the EU’s Balanced Approach regulation, which was written to prevent exactly this kind of unilateral restriction. Other airports face limits, but of different kinds: Heathrow has a planning cap of 480,000 movements that dates from its 2001 Terminal 5 permission and that the UK government is now proposing to lift with a third runway; Frankfurt has a night-flight ban; Brussels has strict night quotas; Zurich has curfews imposed partly by Germany.

The difference at Schiphol is that the cap was imposed after a court found the state in breach of its duty to residents, and that it was pushed through despite an adverse European Commission opinion. That is why the US government engaged: under the EU-US Open Skies agreement, either side can object to operational restrictions that are not justified under international noise rules, and Washington’s July 2025 warning raised the possibility of retaliatory limits on KLM or Air France flights to the United States. The dispute therefore sits at the intersection of Dutch environmental law, EU regulation and transatlantic trade, a position similar to the one Nexperia’s seizure created in the semiconductor sector, where a Dutch domestic decision triggered an international response.

The practical effect so far has been smaller than the rhetoric. Schiphol flew 477,552 movements in 2025, just under the new cap, and expects passenger growth in 2026 from larger aircraft. KLM has taken delivery of its first Airbus A350-900, which landed at Schiphol on 2 October 2026, and is retiring older, noisier aircraft, which both reduces noise and increases seats per movement. The cap bites only if demand outruns the up-gauging, which, with the Middle East crisis suppressing some long-haul demand in 2026, has not yet happened.

What do KLM’s numbers look like over time?

The table shows KLM’s results inside the group for 2024 to the first half of 2026, using the group’s segment reporting.

Two features stand out. KLM’s margin gap with Air France, roughly 3.5 points in 2025, is the inverse of the position a decade ago and reflects Schiphol’s cost and capacity constraints as much as management. And the group’s net income of €1.75 billion in 2025, more than triple the 2024 figure of €489 million, was followed by a first-half 2026 net loss of €61 million, which reflects the fuel shock and the seasonal first-quarter loss rather than a change in the underlying business.

What is KLM’s fleet and network strategy under the cap?

KLM’s answer to the cap is to carry more passengers per movement, which means replacing its Boeing 777-200s and remaining Airbus A330s with A350-900s and 787s on long-haul, and its Boeing 737s with Airbus A321neos on European routes, while KLM Cityhopper, which marked 60 years in September 2026, flies Embraer E2 jets on thin routes. The first A350-900 arrived at Schiphol on 2 October 2026 after test flights in September, the start of a fleet renewal that the group counts as its main sustainability lever alongside sustainable aviation fuel; KLM celebrated the start of construction of the Netherlands’ first SAF plant with SkyNRG in August 2026.

The network is being tilted towards premium long-haul. The group reported strong premium demand in Asia and North America in 2026 and is slowing short- and medium-haul growth, which at KLM means fewer marginal European frequencies and more capacity to North America, where the joint venture with Delta and Virgin Atlantic gives it pricing power, and to Asia, where Chinese carriers’ access to Russian airspace is a structural cost disadvantage for European airlines. KLM also offers free high-speed Wi-Fi on intercontinental flights from October 2026 as a premium differentiator.

On the ground, KLM is reorganising around Schiphol’s investment programme. In May 2026 it signed a final agreement to relocate its facilities at the airport, after Schiphol agreed in November 2025 to buy KLM’s old cargo and catering buildings for about €500 million and build a new cargo hall to rent back to the airline. The catering business itself went to gategroup in July 2026, and a new catering facility is being built at the airport. In July 2026 KLM and the Dutch Ministry of Defence extended their cooperation on training and maintenance, with KLM mechanics training at the Royal Netherlands Air Force. Each of these steps releases capital or reduces fixed costs, which is what Back on Track is designed to do.

What can founders and investors learn from KLM and Schiphol?

KLM’s situation offers four lessons that apply far beyond aviation: about the limits of political protection, the economics of a constrained hub, the value of early cost discipline and the difference between a good year and a good business.

First, a state shareholding does not protect a company from the state. The Netherlands bought 9 per cent of Air France-KLM to protect KLM and then imposed a flight cap that is KLM’s largest strategic constraint. Founders who seek government backing, whether equity, subsidies or procurement, should understand that the same government answers to other constituencies, in this case residents and courts, and that its support is conditional and reversible. The parallel with ABN AMRO’s long state ownership is instructive: public shareholders are patient but not loyal.

Second, a capacity cap converts a growth business into a yield business. When movements are fixed, every decision becomes about revenue per slot: bigger aircraft, premium cabins, better connections, higher fares. KLM’s shift to A350s, premium long-haul and free Wi-Fi is the logical response. A startup facing a hard constraint on its own throughput, a regulated licence, a limited supply of a key input, a fixed number of customers, should ask the same question: what is the revenue per unit of the scarce resource, and how do we raise it?

Third, cost programmes work when they start before the crisis. Back on Track was launched in late 2024, when KLM was still profitable, and had delivered €315 million by mid-2026, when the fuel shock hit. Air France, which did not run a comparable programme, saw its half-year result fall. The timing, not the content, is what distinguishes a restructuring from a rescue.

Fourth, judge a business by its structural margin, not its best quarter. Rintel’s own assessment, that one good half-year does not make KLM structurally strong, is the correct reading of a 1 per cent half-year margin against a group target of 8 per cent. Investors in the group should look at KLM’s position relative to Air France and SAS, at the Schiphol cap and at Dutch labour costs, and ask whether the 2026 improvement is durable. For a comparison with another Dutch transport company living under political constraint, see the PostNL story, and for the freight side of the same hinterland, the Port of Rotterdam story.

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