Finnair To Cut 500 Jobs To Counter Fuel Costs

June 12, 2008

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Finland's flag carrier Finnair plans to cut about 500 jobs to counter high fuel costs and a sharp fall in demand, it said on Thursday.

The company's fuel bill will rise by between EUR160 million euros (USD$246.9 million) and EUR180 million this year compared with last year, the airline said in a statement.

"Demand has decreased and this decrease has accelerated at such a rate in the past weeks that together with the price development of fuel, Finnair's (performance)... has significantly weakened," the airline said.

It added that to ensure the company's growth strategy, it needs additional cuts of at least EUR50 million per year.

The airline plans to cut about 500 jobs to reflect production cuts, it said.

"I am sure they will go through operations with a fine-toothed comb, and if this is about capacity cuts, some flight personnel has to go," eQ Bank analyst Dahlstrom said. "I don't think this is about changing their strategy based on Asian traffic."

Finnair has increased its flights between Europe and Asia in recent years.

Last month, Finnair said its profits would fall from last year's levels, and its May passenger load factor fell 7.3 percent year-on-year to 65 percent.

Finnair pilots are in the middle of wage talks with the airline, and late last month rejected a mediator's offer of pay increases of about 15 percent over the next three years.