Finnair increases its savings target to approximately 100 million euros of permanent cost base reductions by 2022 onwards, superseding the previously announced target
On 20 May 2020, Finnair announced that it was targeting nearly 80 million euros in permanent cost base reductions by 2022, compared to 2019 levels. After a thorough review of the sources for these potential savings, and in recognition that certain elements of the COVID-19 impact, such as remote working and its effect on business travel, are likely to be longer-term in nature, Finnair has increased its savings target by 20 million euros, increasing its initial expectations for a permanent reduction in its cost base of 100 million euros.
Finnair continues to seek savings in such areas as real estate, aircraft leasing, IT, sales and distribution and administration costs, as well as compensation structures. The company will further continue streamlining its operations and the digitalisation and automation of its customer processes. The company will also renegotiate its supplier and partner agreements. In addition, it is initially estimated that 1,000 jobs could be reduced due to the COVID-19 situation and that the indefinite, as well as temporary layoffs, would be continued, as announced today in the press release regarding commenced co-operation negotiations.
”Our revenue has decreased significantly due to the COVID-19 pandemic, and some of the main factors driving that decline appear to be persisting longer than initially expected. Therefore, we are adjusting our cost reduction targets to better address the situation, as there is no swift improvement in sight”, says Finnair’s CEO Topi Manner. “In addition to the continued furloughs, we have today announced plans which could result in a reduction of an estimated 1,000 jobs. These extremely unpleasant measures are necessary to ensure that Finnair will weather this unprecedented change of operational environment and is able to continue its operations from a healthy basis as a smaller company during the coming post-pandemic years.”
Finnair’s current plan still assumes that traffic will recover in 2–3 years to the 2019 level, though the trajectory seems more likely to steepen towards the end of the period due to the reasons stated above.
Finnair starts co-operation negotiations on plans to reduce 1,000 jobs due to COVID-19 impacts and travel restrictions; long-term temporary layoffs continue for thousands of Finnair employees
Finnair starts co-operation negotiations on its plan to reduce up to 1,000 jobs, to make other structural changes and to implement additional temporary layoffs due to the impacts of the corona pandemic. The co-operation negotiations concern approximately 2,800 employees working at Finnair in Finland, and similar processes are conducted in Finnair’s units abroad. Finnair employs a total of approximately 6,700 employees, of whom 6,200 are based in Finland. Almost all of Finnair’s employees in Finland have been temporarily laid off for a part of the spring and summer. In addition to the planned personnel reductions, Finnair will continue to apply temporary layoffs for practically all its personnel in Finland. The temporary layoffs can be either for fixed term or until further notice.
The goal is to ensure the continuity of Finnair’s core operations so that cabin and flight deck crew can return to work gradually as soon as the market recovers and flights can be increased. For this reason, Finnair is not currently planning a permanent reduction of its flying personnel in Finland.
”COVID-19 is the deepest crisis of aviation. The pandemic and the exceptionally tight travel restrictions in Finland have impacted flight demand and we will operate only a small part of our capacity compared to last year. A rapid turn for the better in the pandemic situation is unfortunately not in sight. Our revenue has decreased considerably, and that is why we simply must adjust our costs to our new size”, says Topi Manner, Finnair CEO.
”We want to build a competitive future for Finnair and retain as many jobs at Finnair as possible. Also, we want to be able to offer good connections to the world for Finns and the Finnish economy in the future. Unfortunately, this requires the measures we announced today. As the timeline for aviation’s recovery is unclear, our plan is also to implement significant temporary layoffs to adjust our resources.”
Finnair wants to act responsibly in this difficult situation and will support affected employees through a social program, which will include practical job-to-job support, training and guidance on entrepreneurship.
The planned personnel reduction measures are included in Finnair’s savings target, which Finnair has today updated from 80 million euros to 100 million euros.
Finnair Plc Stock Exchange Release 25 August 2020 at 12.00 p.m. EEST