Finnair appoints new CEO, president

HELSINKI - Finnair PLC said Wednesday it has appointed Mika Vehvilainen, the chief operating officer of Nokia Siemens Networks, as president and CEO to replace Jukka Hienonen, who announced his resignation in August in "crisis conditions."

Vehvilainen will take up the new position on Feb. 1 after Hienonen leaves his post, the Finnish airline said.

Finnair stock closed up more than 2 percent at euro3.87 ($5.82) in Helsinki.

The national carrier has been struggling in the recession with declining demand, competition from budget airlines and overcapacity.

Vehvilainen, who has been employed by mobile phone and wireless equipment maker Nokia since 1991, said Finnair "has all that it takes to emerge from the hard times as a winner," but added that workers and managers must cooperate.

"This will require goal-directed development of the business practices," Vehvilainen said. "It will be necessary to improve competitiveness, and management and personnel will have to cooperate closely in this task."

Outgoing Hienonen said in August that he would resign because he was not satisfied with the pace of change in the airline in the challenging times and partly blamed unions for inflexibility.

His announcement came as Finnair reported it had swung into a second-quarter net loss of euro26 million from a net profit of euro13 million a year earlier. Hienonen said the airline sector was "facing its deepest crisis," and warned of more difficult times ahead.

Finnair has said it will begin statutory talks with all its 9,000 personnel to initiate more cost-cutting measures, after doubling an annual savings program to euro200 million — with most of the new cuts aimed at personnel costs.

"Finnair competes on global markets, and more than half of its markets are abroad. The first task is to make sure that we are globally competitive," Vehvilainen said. He will join the airline in January, a month before taking up the post of CEO.

On Monday, Finnair warned of more cutbacks this winter after slashing capacity by 12 percent in October. Last month, it reported that third-quarter net loss deepened 15 percent to euro21 million ($31 million) and cautioned it would take a long time before the company would be competitive. Sales fell 22 percent in the period.

In 2008, Finnair personnel rejected proposals for pay cuts to help the airline and Finnair axed 500 jobs. This year, the airline has cut 200 jobs and began temporary layoffs for 6,000 workers in April spread out through 2009.

The national carrier is currently in negotiations with the pilots' association, representing more than 700 Finnair pilots. If no agreement is reached over labor contracts, which mainly hinge on working conditions and the employment of non-Finnair pilots, the union has threatened it will begin a strike on Nov. 16.

Finnair, which is 56 percent government-owned, flies to 50 destinations with a fleet of 63 aircraft. Last year, 8.3 million passengers flew the airline, down 4 percent from 2007.

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On the Net:

http://www.finnair.com

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