Finnair Oyj - Company Announcement

Finnair’s savings negotiations with SLSY proved unsuccessful – discussion on savings continues in the ongoing employee consultation negotiations

Finnair Plc         Stock Exchange Release          28th April 2014    at 19:10
EET

Finnair's saving negotiation with the Finnish Flight Attendants' Association
(SLSY), which were agreed upon as a part of the national Finnish Employment and
Growth Pact on 15 November 2013, has proven unsuccessful. Savings negotiations
with the Finnish Aviation Union (IAU) and the Trade Union PRO concerning the
technical personnel still continue. Finnair targets more than EUR 30 million
savings in the personnel costs of these three personnel groups as a part of its
wider EUR 200 million cost savings program. The deadline for savings
negotiations is today 28 April 2014.

Finnair was prepared to offer SLSY, IAU and PRO's members protection for layoffs
for the next two years if permanent savings had been achieved in full. SLSY
members were also offered protection against further outsourcing for the next
two years. Following the unsuccessful negotiation with SLSY, Finnair is now
pursuing the targeted savings in the cabin crew costs in the employee
consultation negotiations commenced on 2 April 2014 and is looking for
alternative operating models to lower its costs."I am deeply disappointed that we failed to reach savings agreement with SLSY.
Unfortunately our and SLSY's views on the magnitude of the savings and how they
should be implemented were too far from each other: Finnair is looking for
savings of EUR 18 million, and SLSY's proposal totalled EUR 7.5 million, out of
which only EUR 2.7 million would have materialised during the current CLA
period. The situation is very difficult for Finnair and its employees.
Unfortunately, now we have to discuss alternative measures to achieve savings
and create a competitive cost structure. I nevertheless hope that we can find a
better solution in the ongoing employee consultation process," says Finnair's
CEO Pekka Vauramo."Achieving the targeted savings is of paramount importance in safeguarding the
future of Finnair and restoring its profitability. Our preferred option was to
find savings together with our staff in negotiations. I am extremely
disappointed that SLSY wasn't ready to agree on permanent savings that would
have safeguarded Finnish jobs. Our proposal to SLSY would have guaranteed
protection against layoffs for the coming two years and a pay level
corresponding to SLSY's generally binding Finnish collective labour agreement.
Our proposal also included several items that would have generated savings
without impact on pay levels," Vauramo says.

”We have progressed today in the saving negotiations of technical personnel.
Their employee representatives have shown strong commitment to the negotiations
and I hope, that we find a positive negotiations outcome in these negotiations,”
continues Vauramo.

Savings negotiations concerning PRO civil aviation clerks ended today without
agreement on saving.

Employee consultation negotiations continue

Finnair continues employee consultation negotiations that commenced on 2 April
2014 and concern the employees working in administrative and support functions
as well as cabin crew. The negotiations impact eight different employee groups.

The administrative and support employee consultation negotiations focus on
productivity improvements. The estimated reduction need in administrative and
support functions is approximately 140 employees.

Cabin crew's employee consultation negotiations discuss the wider use of
outsourcing in the cabin service of its long-haul and short-haul traffic. In the
initial stage, Finnair plans to outsource the cabin personnel of three long-haul
routes at maximum during this year. In the next stage, Finnair would outsource
the cabin service of more than 10 routes. Due to the planned outsourcing the
reduction of approximately 540 cabin attendants would be required in the coming
years.

Finnair is also examining the possibility of setting up a subsidiary that would
produce cabin services and sell them to Finnair.

Finnair will communicate the outcomes of the employee communication
negotiations, both concerning the staff reduction and plans to outsource cabin
personnel for certain routes, once the negotiations are concluded, at the
earliest after mid-May 2014.

Saving negotiations with Finnair pilots, white-collar employees and engineers

The deadline for savings negotiations with the Finnish Airline Pilots'
Association (SLL) is 13 June 2014. The targeted annual savings in SLL's
negotiations total EUR 17 million, and the savings are sought primarily from
renewal of working time and compensation structures.

Finnair's white-collar employees and engineers' (FYT and FIRY) collective
agreements are valid until 30 June 2014, and negotiations for new collective
agreements are currently in progress. The key objective is to increase the
weekly working hours of office and operational staff closer to the general
Finnish level.

Finnair continues to pursue savings in all cost categories. Its target is to
permanently reduce annual costs by 200 million euros by the end of 2014. The
point of reference for the cost reduction target is the company's unit cost
level in 2010. By the end of 2013 Finnair had reached annual savings of EUR 155
million.

Finnair Plc
Communications
FINNAIR PLC
Further information:
Finnair communications, 358 9 818 4020, comms(a)finnair.com

Distribution:
NASDAQ OMX Helsinki
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