Finnair increases its savings target to 140 million euros
On 20 May 2020, Finnair said it was aiming for nearly 80 million euros in permanent cost reductions by 2022. Now as the airline faces a very uncertain future, with deeper holes in its finances, the airline has increased that target to 100 million euros a year by 2022.
The airline says reductions are sought in all areas of the business, including de 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 organisation and operations and the digitalisation and automation of its customer processes. Additionally, it will renegotiate its supplier and partner agreements.
As a part of the cost savings programme, the company has also completed the co-determination negotiations and the resulting global cut of jobs is c. 700. When retirements and other attrition are included, Finnair’s personnel will decline by almost 1,100 compared to the beginning of 2020. Further, as a part of the programme, the company has concluded agreements with some of its employee groups targeting permanent cost savings. The employee groups committed to the permanent savings target participate in an incentive plan which is rewarding the employees for successful rebuild efforts. Also, the indefinite as well as temporary layoffs will be continued.
Finnair’s current plan still assumes that traffic will recover in 2–3 years to the 2019 level, though the trajectory seems likely to steepen towards the end of the period.
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