Finnair, Norwegian post soaring losses amid staff disputes

Nordic airlines Norwegian and Finnair announced on Wednesday soaring losses in the first quarter amid controversies over measures to cut staff costs. The Norwegian budget company, currently under strike threats, posted losses of 594.7 million kroner (72.2 million euros, $100.5 million) in the first quarter. That compared to 117.2 million kroner a year earlier. However, sales rose by by 20 percent to 3.55 billion kroner thanks to increasing traffic. "Traditionally, the first quarter is seasonally weak and in addition the figures have been significantly affected by a weak Norwegian currency (NOK) against the dollar and the euro," chief executive Bjoern Kjos said in a statement. Also, the unexpected leasing of aircraft had hid the results, he added, referring to the measures Norwegian had to introduce to replace its faulty Boeing Dreamliners, which it operates to the United States and Thailand from Scandinavia. Despite its repeated problems with these aircraft, Norwegian said on Wednesday that it would lease another three Boeing 787 Dreamliners, bringing the total fleet to 17 by 2018. Late on Tuesday, the company broke negotiations with cabin crew union Parat on pensions and organisational matters. Norwegian is hiring cheaper foreign staff after registering its long-haul licence in Ireland. The union could call a strike affecting 1,200 employees in Denmark and Norway starting on Sunday. Finnair's first-quarter rose by 78 percent to 28 million euros ($39 million) while revenue fell by eight percent to 543 million euros. "Our result for the first quarter was very weak," chief executive Pekka Vauramo said in a statement. Vauramo explained that the declining revenue was affected by "a slight decrease in overall capacity" and contraction in both leisure and business traffic volume, as well as exchange rate fluctuations, especially in Asia. The company highlighted that "continuing with cost-reduction measures is inevitable and vital for Finnair's future". The airline failed to reach an agreement with its staff on cost-reduction last year, which Vauramo said was "a major disappointment". Finnair wants to cut its cabin crew costs by 35 million euros by modifying salaries and working hours. In March, the company said that the negotiations could lead to 680 job cuts and that it expected to externalise up to 540 employees -- or one third -- of its cabin crew. "Having to rely on unilateral measures is the final and least pleasant alternative, and we hope to avoid it," Vauramo said. Finnair wants to reduce its costs by 200 million euros by the end of the year to attain the levels of 2010, and said it had already reached 163 at the end of March.