On May 20, 2020, Finnair announced that it was targeting nearly €80 million in permanent cost base reductions by 2022, compared to 2019 levels. The company updated the same target in its announcement on August 25, 2020 by increasing it to €100 million and updated it again on October 28, 2020 to €140 million.
Finnair has made good progress in the cost savings program and will reach this target ahead of schedule. At the same time, it has identified new savings opportunities. As a result, Finnair has raised its savings target a further €30 million, increasing its previous expectations for a permanent reduction in its cost base to €170 million.
Despite the updated target, further reductions are still sought in all cost categories. As previously stated, they include 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 organization and operations and the digitalization, and automation of its customer processes. Additionally, it will remain focused on renegotiating its supplier and partner agreements.
In conjunction with the cost savings program, the company completed the co-determination negotiations in the latter half of 2020 and the resulting global reduction in jobs was 600. When retirements and other attrition are included, Finnair’s personnel declined by almost 1,100 compared to the beginning of 2020. Further, as part of the cost savings program, the company has concluded agreements with some of its employee groups targeting permanent cost savings. The employee groups committed to the permanent savings target are eligible to participate in an incentive plan, which rewards employees for successful rebuild efforts. Also, the indefinite as well as temporary layoffs resulting in temporary cost savings will be continued. (€1.00 = US$1.20 at time of publication.)
