Finnair to start outsourcing domestic flights this autumn

Finnair intends to outsource the operations of at least two of its small Embraer aircraft to Finncomm Airlines, a privately-owned Finnish airline company. The training of Finncomm pilots to fly the Brazilian-built planes has been initiated.
      This is a minor move in itself, but it is associated with much larger principles.
      Until now, the Finnish Airline Pilots’ Association (SLL) has strongly opposed all Finnair’s attempts to use outside labour.
      It has also been possible for the Association to use contract provisions to prevent all flight outsourcing attempts.
      However, the pilots no longer have any collective agreement. The previous contract between Finnair and SLL expired last November, and so far all renewal talks have failed.
     
The reaching of a stalemate led to a situation in which the company’s President & CEO Jukka Hienonen made a personal decision. In early August he announced his resignation, saying that he was not satisfied with some personnel organisations’ unwillingness to adapt to the profound changes required in the present competitive environment.
      In Hienonen’s view, the situation is posing a threat to the entire future of Finland’s national airline. The period of notice in Hienonen’s contract is six months, coming to an end in February.
      The CEO has set his sights on the collective agreement of the pilots in particular. Now, in the middle of his period of notice, Hienonen is starting to make changes to the principles of the collective agreement.
      According to Hienonen, it is possible to make such changes, as there is no valid collective agreement, which means that the veto over outsourcing that was included in the old agreement no longer holds good.
      ”We have not wanted to put up too much of a fuss about this, but the leasing of the Embraers is the first move”, says Hienonen, adding that further measures may well be upcoming.
     
In fact, further plans have already been made. In the first phase, two 76-seat Embraer 170 aircraft will be leased to Finncomm, Finnair’s partner since 1998.
      The next phase involves leasing further Embraers to Finncomm to operate on specific Finnair routes that are to be named separately.
      In the third phase, aircraft may also be leased to other airlines.
      There is enough capacity, as Finnair has reduced its own supply by 10 per cent. The aim is to outsource mainly those routes that are less profitable for Finnair, taking into account the company’s cost structure. The piloting costs of Finncom are considerably lower than those at Finnair.
     
At the moment, the aim is to start implementing the plans that deadlocked the talks on a new collective agreement in the first place.
      As late as last spring, SLL reported in its news release that the use of outside labour was the greatest bone of contention in the talks on a new contract.
      The outgoing Finnair CEO says that the aim is to restructure the company’s operations in earnest. He adds that the executive management has the backing of the board and of the state, the largest shareholder in Finnair.
     
Hienonen notes further that he is naturally willing to continue negotiations with SLL, either on the use of outside work or on the entire collective agreement.
      However, the goal is to improve the profitability of Finnair flights by at least 20 per cent, which could be done by cutting the salaries by 10 per cent and by increasing the workload by another 10 per cent.
      Even the counterparty affirms that they are willing to negotiate. SLL nominated a new board according to the conventional schedule last week, and the new Chairman Kristian Rintala says that he has already initiated new talks with the employer in a ”constructive atmosphere”.
      However, Rintala regards the public debate on the status of Finnair as ”surprisingly black and white”.
     
The inflexibility of pilots has been named as the only reason for current difficulties.
      In reality, for example serious miscalculations relating to the price development of fuel have led to hedging losses that are roughly equal to the aggregate of all pilots’ salaries, Rintala argues.
      Nevertheless, Rintala states confidently that he is a bridge-builder, adding that cooperation is the only way out of the company's current straitened circumstances.


Previously in HS International Edition:
  Finnair CEO Jukka Hienonen resigns; new co-determination talks imminent (7.8.2009)
  Slump in aviation not slowing Finnair investments (30.3.2009)
  Finnair plans extensive outsourcing to make up for financial losses (29.4.2009)
  Finnair announces new drastic cost-cutting measures (8.6.2009)

Links:
  Finnish Airline Pilots´ Association (SLL)
  Finncomm Airlines
  Finnair Group