Finnair to commence personnel negotiations over axeing of up to 500 jobs

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The Finnish national carrier Finnair announced on Thursday that it would put into practice new economy measures aimed at saving around EUR 50 million. The programme may include the cutting of up to 500 jobs .
      The personnel negotiations related to the possible redundancies will commence at once, and they are hoped to be finished by the autumn, by which time the company should know the extent of the necessary reductions to its services, says Anssi Komulainen, senior vice president of human resources at Finnair.
      Until now there has only been talk of cutbacks amounting to a couple of percentage-points of capacity, mainly on the European routes. Of late, the situation has got progrssively worse, however, and the airline is now facing appreciably greater reductions than were expected.
     
Finnair is now in the same awkward bind as the rest of the airline branch. The fuel bill for this year will be up to 60 per cent or EUR 180 million higher than last year’s invoice. Simultaneously demand for the vitally important Asian routes has been diminishing. The recent earthquake in China, for one, has had a negative impact on the company’s passenger figures.
      Load factors on scheduled passenger flights fell by 8%-points compared with May 2007, and the decline was even greater in Asian traffic (see earlier article).
      In May Finnair issued a profit warning, according to which this year’s result will fall short of the figures for 2007, which, in all fairness, were surprisingly good. After the release of the warning, the Finnair stock price has plunged by 20 per cent.
     
On Tuesday, the company directors discussed the situation with representatives from all seven trade unions.
      From the talks, suggestions emerged for various practical ways to economise. At that time, the company leadership said that the implementations to follow would be announced in the near future.
      This did not take more than two days. The first one of the personnel negotiations will take place as early as Wednesday next week.
     
Finnair President and CEO Jukka Hienonen estimated earlier this week that if the company were to implement cutbacks equalling the average European overcapacity of 7-10 per cent, personnel reductions would inevitably follow.
      At present, one way to reduce production that has become popular among the world’s airlines is simply to leave some airplanes on the ground.
      Should Finnair choose this option, some of the old MD-11 planes with the poorest fuel economy in the fleet would be the ones to be grounded.
     
Komulainen emphasises that in the personnel negotiations all options are being considered, from terminating fixed-term contracts to converting some positions into part-time work, implementing temporary lay-offs, and eventually dismissals.
      Of the just under 10,000 Finnair staff, 800 are employed on a fixed-term basis. Two hundred of these work as cabin crew.
      On Thursday, representatives of the Finnair trade unions were still unable to comment on the announcement of the personnel negotiations.
      The planned savings of EUR 50 million, however, were generally considered a hard-line decision.
     
The company has just completed a EUR 80 million savings programme that started in 2006 and saw 670 workers, most of them from the technical side, losing their jobs.
      From that department Finnair can no longer afford to lose a single pair of hands, says chief shop steward Esa Suokas of the Finnish Aviation Union.
     
In addition to the personnel negotiations, Komulainen is also involved in the collective bargaining agreement talks. Finnair pilots have launched an overtime ban, because the renewal of their labour contract has failed.
      At the initiative of the National Conciliator Juhani Salonius, the negotiations will resume on Friday.
      According to Komulainen, the company has agreed to continue the talks, even though it previously said it would refuse to take part in any discussions as long as the overtime ban remained in force.


Previously in HS International Edition:
  Finnair makes contingency plans to reduce its number of scheduled flights (11.6.2008)
  Finnair pilots launch industrial action - overtime ban takes effect from late Tuesday night (4.6.2008)

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