Finnair has decided to cancel some of its routes and will look at the possibility of temporarily laying-off staff amid the current health crisis. The flag carrier of Finland is in the process of cutting routes in three of the regions hardest hit by the coronavirus. It also plans to reduce capacity on other routes to mitigate further financial losses.
Routes cancelations in Europe and Asia
Yesterday, Finnair announced that it would be canceling some of its European and Asian routes in order to reflect consumer demand amid the coronavirus outbreak. The airline will be removing its services to mainland China, Milan in Italy and South Korea for the majority of March.
The airline already canceled its operations to mainland China back in mid-February however the cancelation period was only expected to last until 28th March. However, after consideration, Finnair has now announced that routes to mainland China will remain canceled until 30th April 2020. This travel update will affect all flights between Guangzhou, Nanjing, Beijing Capital, Beijing Daxing, Shanghai, Xi´an.
In addition, Finnair has also canceled flights AY101 and AY102 between Helsinki and Hong Kong until 30th April 2020. In Hong Kong, there have been fewer reported cases of coronavirus than in China. Some 103 people have contracted the virus in total of which 37 have completely recovered. Since the health crisis is not as widespread in Hong Kong and clearly there is still some demand, Finnair will continue flights AY99 and AY100 between Helsinki and Hong Kong.
With cases of the coronavirus escalating in Italy, Finnair has also announced that it will cancel its services to Milan. The cancelation will come into effect on 9th March and will continue until 7th April 2020. Likewise, flights to Seoul in South Korea will also be canceled between 9th March and 16th April 2020.
Furthermore, the airline had delayed the inauguration of its flights to Busan in South Korea. Finnair will now launch the route on 1st July 2020, three months behind schedule.
Impact of the cancelations
At this point in time, route cancelations due to the coronavirus are commonplace. Reducing service capacity is the best way for airlines to meet the diminished demand for air travel to certain countries as well as maintain positive financial reports. Not to mention that fewer flights mean fewer chances of international transmission.
However, whilst solutions to mitigate the virus are simple they are not always easy. Finnair has already forecast that the coronavirus will deal it a fiscal blow. On 28th February, the carrier reevaluated its projections and rescinded its expectation for a four percent capacity growth by the end of the year. Evidently, the abridged demand for air travel is already forcing Finnair to take some drastic measures.
In a press release, the airline said that it was looking to reduce its costs, as one might expect. However, the airline needs to do it by more than a few euros. Finnair claims that it is looking to reduce its outgoing costs by €40-50m (between $44.5-55.7m USD). And, unfortunately, route cancelations just won’t cut it.
Temporary redundancy for Finnair’s Finish staff
In order to achieve those cost savings, Finnair believes temporary staff redundancies will be a necessary evil. On 12th March, the carrier will begin negotiations for two weeks. During that period, Finnair will determine which staff will leave. At the moment, the airline says that “employees within the co-operations process” could expect to leave their post for a period of 14 to 30 days. In a statement, Finnair said staff cuts would also be made outside of Finland as well.
The CEO of Finnair, Topi Manner, justified the redundancies as a benefit the airline’s entire operation. In a press release Mr. Manner said:
“As the coronavirus situation has entered a new phase with outbreaks in several new countries, we will take appropriate measures to adapt our costs, operations and resources to better match our revenues…we now see a negative impact on demand. It is difficult to foresee how the situation will evolve during the coming months. At the same time, we strongly believe in our Asia-focus and strategy of sustainable, profitable growth. We are determined to continue on this long-term path despite these temporary adjustments.”
Whilst Finnair will implement what it believes to be temporary lay-offs there has been no suggestion that should the coronavirus escalate further that staff will not be laid off for an even longer period of time.
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