Keeping cost under control is a key part of running a successful airline. The airline industry is unforgiving. Its low profit margins don’t allow much margin for error. Among European carriers that have been having some trouble remaining profitable is KLM. Since 2024 the carrier has been taking on its “Back on Track” program to return stably in positive territory. Part of the program is the sale of 75% of its Catering Services.
In this post:
- KLM Offloads Its Catering Services to Gate Group
- What’s Going To Change With Gategroup Controlling KCS?
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KLM Offloads Its Catering Services to Gate Group
Post covid years haven’t been the simplest for KLM. The airline, while being still one of Europe’s most stable and solid carriers, has gradually lost some of its efficiency.
The answer the dutch carrier has come up with to contrast losing efficiency is the “Back on Track” plan. A plan that will have KLM reduce costs and return to profitability.
A division targeted by the KLM cost cutting plan is the airline’s catering services: KLM Catering Services (or KCS hereafter).
The Dutch carrier is essentially getting rid of this division by selling a 75% stake to the Gate Group. Retaining a minority 25% stake is a way of still having a say in a key and strategically important piece of the entire airline operation.
After all catering is a key part of the onboard experience particularly in premium cabins.
What’s Going To Change With Gategroup Controlling KCS?
First of all from an employment standpoint nothings should change thankfully. All KCS workers should keep their jobs with the division changing hands but remaining stable in the way it operates.
Furthermore the new controlling group, the Gategroup, is a fellow European business, with headquarters based in Switzerland, and has common values and goals to KLM.
The Gategroup is specialized in airline catering as a business, meaning it can better operate at scale than KLM operating its own operation. Ideally the Gategroup will be able to operate KCS with greater efficiency while not compromising on onboard experience quality.
That’s where KLM sees the value of letting go of this strategic asset. It will have lower costs while still have some word and say in the way the operation is run by retaining that 25% equity stake.
Finally the sale of the catering division will also generate a hefty one time income for the airline which is also worth highlighting.