Finnair Oyj - Company Announcement

Finnair starts consultations with personnel on discontinuing its own engine services and adjusting its component services operations

FINNAIR PLC     STOCK EXCHANGE RELEASE      11 APRIL 2012   AT 09.30 AM (EET)

Finnair has today announced it has signed a Memorandum of Understanding with
the Swiss SR Technics on the sourcing of engine and component services. This
cooperation would result in adjusting Finnair's own component services and
discontinuing the company's engine services operations. Finnair now starts
consultations with personnel representatives. These operations currently employ
approximately 350 people at Finnair, and the planned changes would result in a
reduction of approximately 280 positions. 

”This plan is based on a thorough analysis, where we first examined the costs
and structures of our own operations, and then compared the results to tens of
external service providers,” says Ville Iho, Finnair COO. “Our own engine and
component services are unfortunately too small in scale to be cost efficient
enough in the long term.” 

“This is naturally difficult for our personnel,” says Kimmo Soini, Managing
Director of Finnair Technical Services. “Our personnel are highly competent but
our volumes are not competitive. There is overcapacity in the market and the
competition is intense. We explored partnership opportunities as well, but
there was no interest in the market to form a partnership to continue the
operations at Helsinki Airport.” 

Finnair expects the cooperation with SR Technics in engine and component
services to result in significant cost savings for the company, while
maintaining high quality of service. The plan is a part of the structural
change Finnair started in August 2011. Finnair told then that it explores
alternatives to increase the cost efficiency of its engine and component
services. 

“Finnair focuses on its core business as an airline. We intend to double our
Asian traffic and return to profitability. This is possible only if we have a
cost base that enables us to build our future on. It is imperative that we
implement the structural change we started last year,” says Ville Iho. 

The majority of world's airlines use specialized service providers for
maintenance services, and a significant share of Finnair's component and engine
services are already done by partners. Also the majority of the heavy
maintenance of Finnair aircraft is done by partners. Line maintenance, which
ensures the airworthiness of the fleet and employs approximately 550 people,
remains an integral part of Finnair's flight operations also in the future. 

Finnair supports the employees impacted by these changes in finding new
employment through its Career Gate service. Career Gate connects employees to
companies who have recruitment needs, and explores employment opportunities
outside Finnair. Finnair partners in Career Gate with Ministry of Employment
and Economy, Centres for Economic Development, Transport and the Environment,
employment and economic development offices as well as with companies offering
outplacement services. 

Finnair announced on August 5, 2011 that it targeted decreases in its annual
costs of 140 million euros by 2014. Finnair has already announced that it: 
• has chosen Swissport as its partner for  baggage and apron services
• is optimizing the size of its fleet in European air traffic, has discontinued
the leases of four Airbus 320 series aircraft, and subleased five Embraer 170
aircraft 
• has signed an Memorandum of Understanding on the sales of its catering
business to LSG Services 
• seeks a partner to accelerate its Nordic Champion strategy and aims to
significantly lower costs in European traffic 
• has improved its route planning and aircraft utilisation
• is streamlining its support functions as well as  marketing and distribution
activities 
• has initiated  numerous other savings measures throughout the company.

Further information:
Finnair Communications, tel +358 9 818 4020, comms(at)finnair.com