Finnair to cut Jobs

Finnair is planning to improve its competitiveness by initiating a structural change to safeguard the profitability of all parts of the company. Through the planned measures, Finnair aims to achieve annual cost savings of 80 million euros.

“We will restructure functions that support flight traffic, which will mean reductions in personnel. On the other hand, if we achieve through the restructuring a competitive cost level, increasing traffic will create a thousand new jobs in flight operations in the years to come,” said President and CEO Jukka Hienonen.

The Finnair Group will initiate statutory employer-employee negotiations, under the Act on Co-Determination within Undertakings, to cut 670 jobs in 2006–2007. The emphasis will be on Finnair Technical Services and on administrative support functions. The personnel reductions are planned to be implemented primarily through early retirement and by outsourcing functions, but some redundancies are unavoidable.

“I fully understand that these decisions can be difficult on an individual level, which is why it is our goal to find solutions to fit everyone’s situation and work history. Safeguarding Finnair’s viability demands courage to cut unprofitable business. Our fuel bill rose last year by 100 million euros and this year we will pay 120 million euros more. We will only be able to pass on a fraction of this into ticket prices,” explained Heinonen.

A project to improve competitiveness was initiated in Finnair Technical Services at the beginning of the year. The objective is to dispose of unprofitable maintenance functions. As a consequence of the restructuring, statutory employer-employee negotiations covering all Technical Services staff will begin with the aim of cutting 300 jobs. The business unit currently has 1,900 employees.

“In the future, we will discontinue maintenance preparedness for types of aircraft we no longer fly. Our fleet is the most modern in Europe, which means that the amount of labour required for maintenance will fall,” said SVP Finnair Technical Services Kimmo Soini.

The aim is also to merge Finnair Group’s financial services units and, owing to the acquisition of new information systems, work processes in a number of other administrative units will be reorganised, reducing the need for labour by more than a hundred employees. The possible outsourcing of real-estate management is also being investigated.

In addition to the reductions in personnel, negotiations will begin with flight staff and the employees of Northport Oy, which provides ground handling services, to increase the flexibility of terms and conditions of employment. The aim of any changes will be to improve productivity and cut costs.

The Finnair Group’s total number of employees is not expected to fall as a result of the announced measures, because growth in traffic will also require substantial additional investment in some areas. During the current year, Finnair will recruit up to 350 new flight operations staff. In future, the need for additional staff in operational activities will amount to as high as 200 employees per year.

“Our Asian traffic will grow by 20% this year. From this summer we will have a long-haul fleet of eight wide-bodied aircraft, and growth in Asian traffic will also attract additional passengers to our European routes. In future, too, we intend to be competitive in traffic between Europe and Asia both in terms of product quality and cost efficiency,” added President and CEO Hienonen.

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