Finnair Plc         Stock Exchange Release           25 August 2020 at 12.00 p.m. EEST

On 20 May 2020, Finnair announced that it was targeting nearly 80 million euros in permanent cost base reductions by 2022, compared to 2019 levels.  After a thorough review of the sources for these potential savings, and in recognition that certain elements of the COVID-19 impact, such as remote working and its effect on business travel, are likely to be longer-term in nature, Finnair has increased its savings target by 20 million euros, increasing its initial expectations for a permanent reduction in its cost base of 100 million euros.

Finnair continues to seek savings in such areas as real estate, aircraft leasing, IT, sales and distribution and administration costs, as well as compensation structures.  The company will further continue streamlining its operations and the digitalisation and automation of its customer processes. The company will also renegotiate its supplier and partner agreements. In addition, it is initially estimated that 1,000 jobs could be reduced due to the COVID-19 situation and that the indefinite as well as temporary layoffs would be continued, as announced today in the press release regarding commenced co-operation negotiations.

"Our revenue has decreased significantly due to the COVID-19 pandemic, and some of the main factors driving that decline appear to be persisting longer than initially expected. Therefore, we are adjusting our cost reduction targets to better address the situation, as there is no swift improvement in sight", says Finnair's CEO Topi Manner. "In addition to the continued furloughs, we have today announced plans which could result in a reduction of an estimated 1,000 jobs. These extremely unpleasant measures are necessary to ensure that Finnair will weather this unprecedented change of operational environment and is able to continue its operations from a healthy basis as a smaller company during the coming post-pandemic years."

Finnair's current plan still assumes that traffic will recover in 2-3 years to the 2019 level, though the trajectory seems more likely to steepen towards the end of the period due to the reasons stated above.