Finnair intends to subcontract a larger share of inflight service on its long-haul flights as part of a wider company overhaul and cost-reduction exercise to address the effect of Russia’s invasion of Ukraine and the closure of Russian airspace. Plans call for negotiations with cabin crew representatives to start November 23 and the additional subcontracting by the end of 2023, unless the sides can reach an agreement on cost reductions.
“Our target continues to be to find a savings solution together with our cabin crew,’” said Finnair CEO Topi Manner. “We now need a genuine will from the negotiators to find solutions that would allow us to continue inflight service with our own crew and avoid redundancies.”
If realized, the subcontracting plan could result in reducing up to 450 jobs in Finnair’s inflight services, the airline confirmed on Wednesday. Finnair employs about 1,750 cabin crew members in Finland. Finland’s flag carrier—the Finnish state still owns 55.9 percent of Finnair’s shares—already outsources cabin service for its Singapore, Hong Kong, and India routes as well as for the routes to Doha, Qatar, from Stockholm and Copenhagen. The additional outsourcing to external partners would involve cabin crew working on the airline’s routes to and from Thailand and the U.S.
For years, Finnair has focused its long-haul network on Asia using the geographic position of its Helsinki base to provide connecting flights between the region and Europe. But that strategy came under pressure, first due to the Covid pandemic and then the closure of Russian airspace. The considerably longer distance for flights to Asia—distances between its main hub and key destinations in Asia increased by 30 to 40 percent compared with the short northern route, using Russian airspace—accompanied a sharp rise in fuel prices and a stronger U.S. dollar, prompting the airline in September to adopt a more balanced network strategy and embark on a cost-cutting drive to restore profitability. The airline must cut unit costs by about 15 percent from the 2019 level to restore competitiveness in all markets, according to Manner. The revamp also includes a reduction of its 80-aircraft fleet to optimize the fleet for the revised network. During the third-quarter results call with analysts on October 28, Finnair said it would deploy about 80 percent of its pre-pandemic capacity in the fourth quarter of this year, though that would depend on agreements to wet lease its aircraft.
Since announcing the strategy and restructuring, Finnair has engaged with staff to realize cost-cutting measures and changes to employment terms.
“A negotiation result was reached with some employee groups, but unfortunately, a solution was not found with the cabin crew in Finland. In this situation, Finnair must seek savings through alternative measures,” the airline stated.
Finnair expects negotiations over the changes to last at least six weeks and for discussions to include a social support program to help those who could lose their jobs.