The COVID-19 situation has indeed hit the aviation industry hard. Airlines globally are expected to be stuck in a limbo for several months to come whilst meticulously trying to balance profit margins and sustainability. As a latest example of this, Finnish flag-bearer, Finnair, has stated its plans on August 25, 2020 (Tuesday) to cut 1000 jobs. This would account for about 15 percent of Finnair’s total workforce.
The Chief Executive of Finnair, Mr. Topi Manner, said in a statement:
‘Our revenue has decreased considerably, and that is why we simply must adjust our costs to our new size. A rapid turn for the better in the pandemic situation is unfortunately not in sight.’
Who Will be Affected by Finnair’s Job Cuts?
The job cuts shall not be applicable to flight deck and cabin crews. However, that staff will remain on furlough until further notice – about 6700 employees of Finnair are furloughed as of now. Instead, the job reductions shall be intended for the airline’s ground and airport handling crews.
Finnair has cancelled more than 90% of planned flights since April 1, 2020. The airline even issued a profit warning, blaming the restrictions brought about by COVID-19. Alongside the mentioned layoffs, the airline plans to undertake more structural and managerial changes, and has updated the savings target from €80mn to €100mn. In an attempt to remain liquid, the airline had released shares worth almost €500mn two months ago.
Finnair Fleet Reduction – What is Happening and Why?
In another attempt to raise cash and reduce its fleet size (thereby, transitioning to a more lean business model), Finnair has sold one of its Airbus A350 aircraft. The airline had a fleet of 15 A350 aircraft. The company shall continue operating this A350, however, on a leased basis henceforth. The sale and leaseback strategy has supposedly improved Finnair’s financial position roughly by €100 million.
The A350 in subject here was delivered to the airline earlier this year, in February 2020, registered OH-LWP, thereby, making it the newest aircraft in Finnair’s fleet. Currently, the airline has brought 11 A350s back into service, while four aircraft still remain parked. Many airlines recently have opted for the sale and leaseback option – Southwest Airlines being the most notable example.
While the situation at Finnair is indeed fragile, much like most airlines globally, we hope the company restructuring and fleet resizing allows the carrier to sustain in the current and foreseeable uncertain times. What are your thoughts on the situation at Finnair? Do you think the carrier will reduce its fleet size furthermore? Let us know in the comments!