Finnair adjusts volume-driven costs in line with demand

posted on 20th May 2020 by Eddie Saunders
Finnair adjusts volume-driven costs in line with demand

Finnair adjusts its volume-driven costs in line with demand. Due to for example the Finnish temporary layoff practices, a significant part of Finnair’s costs can be adjusted in accordance with demand in the prevailing market conditions. In 2019, volume-driven costs formed c. 60% of Finnair’s total cost base.

In addition, Finnair targets almost 80-million-euro permanent cost base decline starting from year 2022 compared to year 2019. Finnair seeks savings in for example real estate costs, aircraft leasing costs, compensation structures, sales and distribution costs, IT costs as well as administration costs. Finnair will also continue streamlining of its operations and digitalisation and automation of its customer processes. In addition, the company will renegotiate its supplier and partner agreements.

The coronavirus changes the aviation market considerably also in the long run. In the short-term, we must adjust our operations to the substantially decreased demand. In addition to the previously published temporary layoffs, we have today announced that we will commence discussions related to further adjustment measures. The Finnish temporary layoff practices enable flexible adjustment measures both for the employer and the employees during these exceptional circumstances”, says Finnair’s CEO Topi Manner.

In the post-corona market, those who can adapt their costs to the changed market and the competitive situation are the ones who will succeed. Finnair intends to be among the winners, and that is why we target savings across different cost items in a determined way.”

Finnair’s current plan assumes that the traffic will recover in 2-3 years on the 2019 level. In case the competitive environment would turn out to be more challenging or the demand softer than currently estimated, Finnair will take further actions, if required.