Nordic carrier Finnair and European low-fare regional operator Flybe have signed a definitive agreement formalizing an Memorandum of Understanding signed this summer for Flybe Finland Oy to take over the operation of Finnair’s Embraer 190 fleet from the start of the Northern winter schedules on October 28, 2012. The agreement is part of the Finnish national carrier’s efforts to improve the profitability of its European network, and it offers
Under the agreement, Finnair will transfer the operation of its twelve 100-seat Embraer aircraft to Flybe Finalnd Oy, which from October 28, 2012 onwards, will operate these aircraft for Finnair as contract flights. This means the commercial control and risk for these routes remains with Finnair and it will continue to be responsible for sales, marketing and customer support, but it suggests it could achieve potential cost savings in excess of 25 per cent as part of the cooperation. There is likely to be little impact on Finnair's revenues or balance sheet, but it is looking for significant cost savings through Flybe's more efficient operating model.
Flybe Finalnd Oy is a 100 per cent subsidiary of Flybe Nordic, a joint venture between Flybe (60 per cent) and Finnair (40 per cent). It currently operates 15 domestic and other short-haul routes for Finnair under an existing contract flying agreement as well as several other routes on its own commercial basis.
“This contract flying agreement with Flybe covers approximately one third of our European flights,” said Mika Vehviläinen, Chief Executive Officer, Finnair. “Flybe offers a cost efficient platform for operating this traffic, and enables us to continue to offer a wide network and multiple frequencies to both our Finnish customers and our customers flying between Europe and Finnair’s Asian destinations.”
Finnair and its pilot association have agreed that the Embraer pilots will remain employed by Finnair in connection with the business transfer and that they will fly the E-Jet aircraft for Flybe under their current terms of employment. Following Finnair cabin personnel's decision to give up their right to transfer to Flybe's employment in connection of the business transfer, Flybe is hiring new cabin personnel for the aircraft.
Finnair announced on August 5, 2011 that it targeted decreases in its annual costs of €140 million by 2014. It has already agreed for LSG Sky Chefs Group to take full managerial and operational responsibility for the inflight and catering service; for SR Technics to take over engine and component services and Swissport as its partner for baggage and apron services. It has also improved its route planning concepts, optimised its fleet by discontinuing the leases of four Airbus 320 series aircraft in 2012, and sub-leased five Embraer 170 aircraft and it continues to analyse opportunities to improve efficiency across its European Airbus network.
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