Finnair to cut costs / jobs

Finnair is launching extensive adjustment measures, to improve its profitability and business prospects in the current crisis of the air travel industry, with an annual savings target of 160 million euro. Finnair has said the necessary solutions will be carried out for the most part by the end of the year, and is hoped that results of the changes will be seen as of 2005. As a part of its adjustment measures Finnair has today started proceedings with personnel groups in accordance with the Act on Co-operation within Undertakings.

The savings targets represent approximately ten percent of all operational expenses for Finnair Group. Personnel expenses represent approximately 60 million euro of the total savings amount. This is equivalent to a cut of approximately 1200 jobs in the Group during two years. Some 200 hundred jobs will be cut in Finnair Group travel agencies where proceedings in accordance with the Act were started earlier this month. In air traffic related business units the need is for a cut of approximately 1000 jobs. The way in which the reductions in personnel expenses will be realised will be formulated as the proceedings advance.

"The change in the market situation requires the improvement of the Group's competitiveness by sustainable and permanent means. Streamlining the cost structure is a prerequisite for safeguarding Finnair's vitality in the future," says President and CEO Keijo Suila.

Personnel expenses account for approximately 30 percent of Finnair's expenses, with variable costs making up 38 percent and other operating expenses 32 percent. The cost-cutting programme aims for permanent structural changes in both the personnel and organisational structure. In proportion to Finnair's capacity plans for the next few years, the savings target means a 15 percent improvement in unit costs.

As Finnair carries out the adjustment programme, its strategy remains unchanged: sustainable and profitable growth as well as focusing on core businesses.