To help reduce operational costs, Finland airline, Finnair has announced its decision to outsource cabin services for 20 long and short-haul flights over the next two years. It is not yet clear about the related impact this will have upon current personnel.
This is not breaking news, as Finnair have been finalising cost-saving measures since March, particularly in the area of cabin services. Finnair has had a cost reduction program in place since 2011, aiming to reduce operational expenses by 18 million EUR. The options include personnel reductions including redundancy, temporary lay-off, hours reductions or a combination of all these options. The cabin services outsourcing plan will go ahead and will be trialled in order to determine the best course of action moving forward for the airline. Finnair will also examine the cost implications of setting up a subsidiary to take over the cabin services functions.
Ville Iho, Chief Operating Officer for Finnair made the following statement, “Finnair has once more met with representatives of the Finnish Cabin Crew Union (SLSY) in an effort to find a common cost reduction solution that would make it possible to avoid outsourcing. SLSY offered 2.9 million EUR in permanent, instant savings, as well as 4.8 million EUR savings that would be achieved within a 20-year time period. This is mainly the same as SLSY’s previous offer. In addition, as a new element, SLSY proposed approximately 4 million EUR temporary savings for a period of one year. In exchange, SLSY required two year protection against lay-offs. Unfortunately, this is too far from the savings that Finnair requires. We cannot continue with our current cost structure, which is why we need to make instant, permanent changes to it. We proposed a solution that would see 12 million EUR of the cost reductions implemented immediately and the remaining 6 million EUR over a longer period of time. Even this compromise did not lead to an agreement.
He added that partnership negotiations for outsourcing are proceeding well, with potential partners in Finland, Europe and Asia. No rushed decisions will be made and careful negotiation and planning will be ensured.