Finnair aims for a clear productivity improvement as part of its 60 million euro savings program
14-Aug-2013 Finnair seeks clear savings in personnel costs as part of its 60 million euro savings program announced on October 26, 2012. The company has further defined its plans as it prepares to discuss collective labour agreements with its flying personnel, customer service personnel, cargo personnel and technical personnel in the autumn. Especially in connection with the collective labour agreement negotiations, there is a good opportunity to agree on necessary savings together. Primarily the aim is to identify saving methods that would not impact base salary, but would nonetheless decrease company costs.
Finnair has already begun discussions with labour groups and their respective labour unions (Finnair Airline Pilots Association, Finnish Cabin Crew Union and Finnish Aviation Union) on methods and schedules by which the saving targets could be reached. The aim is to consider how compensation and working time structures could be renewed to make them competitive and to better align them with market salaries and practices. The aim is to also to discuss methods to reduce costs which would not impact on employees' earnings. The collective labour agreements between Finnair and these unions end at the end of this year or the beginning of next year. Pilots' and cabin attendants' share from this program is approximately 35 million euros, which is divided roughly in half between these groups. Finnair's saving target for technical and Customer Service and Technical Services employees is approximately 8 million euros.
Finnair continues to define the saving targets for its other personnel groups and functions.
"Finnair's success is important to Finland and to Finns. For us at Finnair this means that we have to be able to adapt to tight competition and difficult economic times," says Finnair CEO Pekka Vauramo. "Together with personnel, we will seek to find solutions that enable the company to operate at market level costs, create conditions for profitable growth and in this way create more jobs in the next decades. From all the means available, the collective labour agreement negotiations are the best way to find solutions together. We are targeting savings from renewal of working time and compensation structures, and by decreasing other personnel-related costs. We want to pay competitive market salaries. Together with personnel and personnel representatives we will seek to find different ways for increasing productivity, and also discuss whether we could find such personnel-related costs which would not impact employees' earnings."
Vauramo stresses that labour costs are not the only item under scrutiny, and the company continues to seek savings across its operations. Finnair has advanced more rapidly than anticipated in its 140 million euro savings program announced in August 2011. In this program, the company has been able to identify items which have replaced those personnel related savings that have not yet realised.
"Adapting to the rapid change in the industry is not easy for us at Finnair," stresses Vauramo. "We want to act in a responsible manner and face market realities with an open mind. We have the possibility to succeed and grow, but it requires a financially sustainable foundation. Some of our current salary and working time models have been created in a completely different competitive environment, and they are now limiting our growth. This is a highly competitive industry and we must adapt our costs to the market level."
"We have achieved a lot, but we have a lot of work ahead us. Finnair needs to grow its business in order to succeed. We carry responsibility for Finnair's future and for offering excellent flight connections to Finns", Vauramo says. "Succeeding in global competition will bring more work to Finland, where aviation already employs directly and indirectly more than 100,000 people. Finnair plays a central role in this ecosystem, and it is our duty at Finnair to ensure our company remains vital and competitive."
Finnair announced on August 5, 2011 that it targets permanent decreases in annual costs of 140 million euros by 2014. On October 26, 2012, Finnair announced an additional savings target of 60 million euros.
Related to the savings programs, Finnair has already announced that it:
• has optimized the size of its fleet in European air traffic by discontinuing the leases of four Airbus 320 series aircraft, and subleasing five Embraer 170 aircraft in 2012
• has transferred its baggage and apron services at Helsinki airport to Swissport in autumn 2011
• has signed a savings agreement with cabin attendants in December 2011 and with pilots in May 2012
• has chosen SR Technics in 2012 as its partner for engine and component services
• has chosen LSG Sky Chefs in 2012 as its partner for catering operations
• Has transferred its Embraer traffic in autumn 2012 to be operated by its cooperation partner Flybe Finland and continues to seek solutions to improve the profitability of its European traffic
• has improved its route planning and aircraft utilisation in 2012
• has streamlined its support functions as well as marketing and distribution activities in 2012 and 2013
• has adapted the Technical Services operations to current needs in 2012 and 2013
• has initiated and is initiating numerous other savings measures throughout the company.