FINNAIR PLC STOCK EXHANGE RELEASE 26 OCTOBER 2012 AT 9.31 AM eet
Finnair is launching a new cost savings program that targets sustainable annual cost savings of 60 million euros by the end of 2014. With this program, Finnair aims to ensure its competitiveness and ability to make future investments. Finnair estimates it will reach a profitable operational result in 2012 after several loss-making years, and its existing structural change and cost reduction program, targeting 140 million euro savings, has progressed well. However, Finnair faces significant fleet investments in the coming years, which will require a sustainable improvement in the company’s profitability.
The new 60 million euro cost savings program complements Finnair's existing structural change and cost reduction program launched in August 2011. The new program focuses especially on streamlining operations and processes in different business and support functions, so that they meet the future needs of Finnair as it undergoes a major structural transformation.
"We have implemented major structural changes in the past twelve months and have progressed largely as planned in developing our operations and improving our cost-efficiency,” says Finnair CEO Mika Vehviläinen. “And we estimate to reach profitable operational result this year. However, we are still far off from our long-term profitability target of 6% operating profit margin. In addition, high fuel price, tightening competition and cost savings measures implemented by our competitors urge further measures from us, because we want to emerge as winners from the current turmoil in the airline industry."
"Our task is now to optimise our operations for the requirements of the new Finnair,” Vehviläinen continues. “We will reach the new cost savings target by assessing and developing our processes and functions. We will discuss with our personnel and its representatives how to reach the goals of the new cost savings program and operate more efficiently and increase our labour productivity. I am convinced that it is possible to achieve savings also in those areas where our cost level compared to peers is still high and hasn't decreased."
Renewing Finnair’s fleet is vital for the implementation of the airline's Asian growth strategy. Investments related to fleet renewal are significant in the coming years: Four Boeing 757 aircraft, used in Finnair's leisure traffic, will be replaced with five Airbus 321 ER aircraft in 2013 and 2014, and the first of 11 Airbus 350 XWB aircraft will join Finnair's fleet in 2015. The value of these investments totals 1.2 billion euros.
Finnair is the first European airline to fly the next generation Airbus 350 XWB aircraft. The purpose of the coming investments is to offer customers an outstanding travel experience with a cost-competitive fleet.
Finnair will announce further details of the new savings program as plans progress.
Further information
Finnair Media Desk, tel +358 9 818 4020, comms(at)finnair.com
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