Finnair’s codetermination negotiations mainly concluded - Decisions later during June

Finnair Plc         Stock Exchange Release      26 May 2014 20:15 pm EET

Finnair’s codetermination negotiations first announced on 27 March concerning
administration and support personnel as well as cabin personnel have been
largely concluded. Unfortunately, no common alternative was found to avoid lay
-offs and outsourcing. Finnair is now considering the measures it will take as a
result of the codetermination process. Negotiations concerning Finnair Flight
Academy’s simulator maintenance and internal bank service still continue.

Negotiations concerning cabin personnel

The negotiations concerning the cabin personnel covered Finnair’s plans to
increase the use of outsourcing in the cabin service of its long-haul and short
-haul traffic. Finnair has said that it plans to outsource the cabin personnel
of at maximum three long-haul routes during this year and more than 10 routes in
the next stage.

During June Finnair will make decisions based on the codetermination
negotiations. The reduction need was estimated to be approximately 540 man
-years. Options include carrying out lay-offs, temporary lay-offs, shifting to
part-time work or a combination of these. Finnair has in total 1500 cabin
attendants in Finland.

Separate from the codetermination process, Finnair has said it is examining the
possibility to set up a subsidiary that would produce cabin services and sell
them to Finnair Plc. Finnair will inform about the progress of these plans also
in June.

”Finnair is financially in a serious situation and needs to make difficult
decisions in order to survive. After the long savings negotiation period, we
still hoped to find in the codetermination negotiations solutions that would
allow us to avoid lay-offs and outsourcing. Unfortunately this did not happen,”
says CEO Pekka Vauramo. “As an alternative to outsourcing, the employee
representatives gave the same proposal that SLSY had earlier presented in the
savings negotiations. The proposal would bring 2.7 MEUR savings from the labor
costs of the current employees. This is too far from the savings that we need.”

”We cannot handle the competition with our current cost structure. Now it is
time to decide on how to guarantee good-quality yet cost-competitive service in
the future,” Vauramo adds.

Negotiation concerning administration and support functions

The administration and support functions included in the codetermination process
employ altogether some 800 persons in various tasks. Originally the reduction
need was estimated to be approximately 140 employees. The negotiations still
continue in some of the functions but the codetermination process has been
mainly concluded. Some measures that may reduce the number of redundancies, such
as transfers within the company and pension schemes, were discussed in the
negotiations.

The final personnel impact will be determined after each function considers the
measures to be implemented as a result of the codetermination process.

Personnel will be informed within the coming weeks about the decisions that are
made based on the negotiation process. As part of its savings program started in
2011, Finnair aims at reaching 6 MEUR savings in the administration and support
functions.

Through Finnair’s Career Gate service the company offers re-employment support
to any employees made redundant. The Career Gate service, established in autumn
2011, helps employees find new employment opportunities.
FINNAIR PLC
Further information:
Finnair communications, +358 9 818 4020, comms(a)finnair.com

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