Finnair has confirmed that it will proceed with
cabin service outsourcing as a means of helping to achieve its cost
The company is planning to outsource cabin
services on a total of approximately 20 long-haul and short-haul
routes in the next two years.
The aim is to outsource 1–3 routes
within this year.
The timetable for the implementation of the
plans and the related impacts on personnel will be determined in
stages as negotiations with potential partners move ahead.
On 27 March,
Finnair announced it was starting employee consultations
concerning cabin personnel. The consultations, which were
concluded on 26 May, were focused on Finnair’s plans to increase
the use of outsourcing in cabin services in long-haul and
short-haul traffic. The measures are part of Finnair’s cost
reduction program commenced in 2011. Finnair sought EUR 18 million
in permanent annual cost reductions primarily through negotiations
with cabin personnel, but the negotiations did not lead to the
The need for reductions in own personnel
over the next two years in relation to the outsourcing plans is
approximately 540 man-years, as discussed in the employee
consultations. The personnel reduction options include
redundancies, shifts to part-time work, temporary lay-offs, or
combinations of these. The method of implementation will depend on
the progress of route outsourcing and will be determined in more
detail as route-specific decisions are made.
once more met with representatives of the Finnish Cabin Crew
Union SLSY in an effort to find a common cost reduction solution
that would make it possible to avoid outsourcing. SLSY offered 2,9
million euro permanent, instant savings as well as 4,8 million
euro savings that would be achieved within a 20 year time period.
This is mainly the same as SLSY’s previous offer. In addition, as
a new element, SLSY proposed approximately 4 million euro
temporary savings for a period of one year. In exchange, SLSY required two year protection againts lay-offs. Unfortunately, this
is too far from the savings that Finnair requires. We cannot
continue with our current cost structure, which is why we need to
make instant, permanent changes to it. We proposed a solution that
would see EUR 12 million of the cost reductions implemented
immediately and the remaining EUR 6 million over a longer period
of time. Even this compromise did not lead to an agreement,” said
Ville Iho, Finnair’s Chief Operating Officer.
negotiations concerning outsourcing are proceeding well. We expect
to conclude our first agreements in the third quarter and
outsource our first routes in the fourth quarter. There are
potential partners in Finland, elsewhere in Europe, as well as
Asia. Each instance of route outsourcing requires careful
negotiation and planning to ensure the best possible service
quality and compatibility with the rest of our operations. For
this reason, we will be proceeding with outsourcing in stages,”
Ville Iho added.
Finnair has also announced it is examining
the possibility of setting up a Finnish subsidiary that would
produce cabin services for Finnair Plc. Finnair will move ahead
with setting up a subsidiary.
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