Finnair to start negotiations on cutting 670 jobs to save EUR 80 million a year

Personnel reductions mainly in technology and administration

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The Finnish airline Finnair is starting negotiations with personnel on the reduction of 670 jobs this year and in 2007. The focus of the cutbacks is to be on Finnair Technical Services and in corporate administration. The aim is to reduce the 1,900 work force of Finnair Technical Services by about 300 employees.
      "The rest will come in smaller streams from different parts of the organisation", Finnair CEO Jukka Heinonen said on Friday at a press conference in Vantaa.
      Finnair also calculates that it can reduce in the company’s economic service staff and administrative personnel by about 100 through consolidation of work processes.
      Finnair hopes to achieve the bulk of its staff cuts through pension arrangements and by outsourcing operations. The airline calculates that it could save about EUR 80 million a year through the arrangements.
      "This means that the savings will be realised next year", Heinonen says.
     
Presenting Finnair’s first-quarter result, Heinonen attributed the need for cutbacks mainly to higher fuel prices, lower ticket prices, and excess capacity in the field.
      He added that all airlines are trying to be more efficient to survive.
      The excess capacity is being made worse by the fact that all airlines that can are buying more new planes than ever, because the new models are between 10 and 15 percent more fuel-efficient.
      Finnair’s fuel bill grew by EUR 30 million in the first quarter compared with the figure a year ago, and market expectations are for further increases.
      Fuel costs account for one fifth of Finnair’s turnover, whereas three years ago it accounted for just one tenth, Heinonen said.
      On the positive side, he noted that the world is in a strong economic upswing; Finnair flights are carrying more passengers than before, and bookings are high.
     
In January through March, Finnair’s turnover grew by eight percent, and demand on Asian routes increased by more than 20 percent.
      Nevertheless, the company sustained more than EUR 5 million in losses, compared with a profit of EUR 14 million at the same time last year. In spite of the figures, Finnair still expects to show a profit for the whole year.
      Heinonen says that the optimism is based on Asia: "Without it, our problems would be on a completely different scale."
     
Heinonen said that the aim of the personnel cuts is to have a lighter hierarchy and to get more flexibility. In his view, Finnair has changed from being a company that takes people from Finland to other parts of the world, to one that operates between Asia and Europe.
      Finnair has previously said that it would hire more than 300 new people for its flight operations - mainly as pilots, flight attendants, and customer service.
      If the growth targets for its Asian flights are realised, there could be as many as 1,000 new jobs in the near future.
      "This is gardener’s work. Sometimes pruning is necessary so that something new will grow."
      Heinonen says that the aim is to use dismissals "as a last resort", after the options of pension packages, outsourcing, and reassignment have been exhausted.
      "I cannot yet say how many redundancies there will be; it will probably be clear by the end of June."
     
In addition to personnel cuts, Finnair is starting negotiations with its flight staff, and with employees of the ground services company Northport on increased flexibility.
      "We must open the labour contracts in order to get rid of structures that prevent flexibility", Heinonen explained.
      Finnair calculates that Helsinki-Vantaa Airport is becoming an increasingly important hub for flights between Europe and Asia. This means that the airport could face considerable crowding at peak hours in the mornings and early evenings.
      Finnair hopes to achieve a new contract which would allow the use of outside temp workers for the busiest periods.
      "If we want to build a sauna, we do not want to pay carpenters for hours in which no work is done", Heinonen explained.


Previously in HS International Edition:
  Union says Finnair Asian flight attendants still underpaid (24.1.2006)
  Finnair to hire 1,300 new pilots and cabin staff in years ahead (8.1.2006)
  New Finnair CEO Jukka Hienonen gets his wings (3.1.2006)

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