Finnair to Cut 1,000 Jobs as Virus Rips Through Its Business
(Bloomberg) -- Finland’s national carrier Finnair Oyj plans to eliminate as much as 15% of its workforce and push through deeper cost cuts in an effort to survive one of the worst crises in aviation history.
The airline will slash a maximum of 1,000 jobs and lay off “practically all of its personnel in Finland,” it said on Tuesday. Finnair also raised its 2022 cost-savings target to 100 million euros ($118 million) from 80 million euros.
Its shares rose as much as 8.5% in Helsinki, as investors welcomed the airline’s focus on saving money.
“A rapid turn for the better in the pandemic situation is unfortunately not in sight,” Chief Executive Officer Topi Manner said. “Our revenue has decreased considerably, and that is why we simply must adjust our costs to our new size.”
Finnair has already raised 500 million euros in new capital after travel restrictions caused by Covid-19 grounded more than 90% of its fleet last quarter. It also scrapped a planned dividend and has explored selling as much as 200 million euros in hybrid debt. Even so, it’s headed for a substantial loss this year.
Some impacts from the pandemic are likely to be longer-term in nature, including remote working and the fallout on business travel, Finnair said. It’s trying to find savings in areas like real estate and aircraft leasing. The company also plans to continue streamlining its operations, and to digitize and automate as many customer services as possible.
Finnair reiterated an assumption that it will take another two to three years before traffic recovers to levels seen in 2019.
The Finnish state, which holds a majority stake, stands behind its airline, Tytti Tuppurainen, minister in charge of ownership steering, told reporters. No decision has been taken on any new financial aid to the carrier, she added.
“Airlines are fighting for their survival, and unfortunately that’s also true for Finnair,” Tuppurainen said.
©2020 Bloomberg L.P.