Many airlines worldwide are facing significant financial crises due to the financial implications of coronavirus. Finnair is one such carrier. In order to help facilitate its rebuilding process in years to come, the airline is calling upon its employees to help secure the company’s future. The Finnish flag carrier has launched a long-term incentive program to promote this movement.
Three-year rebuilding period
In a press release dated October 9th, Finnair launched a long-term incentive plan as part of its attempts to rebuild following the coronavirus pandemic. The program will reward employees with payments in 2023 should the rebuilding process prove successful.
This is set to take years of hard work and dedication, and the airline has already sold an Airbus A350 to raise money. Finnair was reported in April to be losing €2 million a day, with refunds between February and June amounting to €270 million.
The incentives specifically concern “personnel groups with whom it reaches agreements on permanent cost savings that support Finnair’s recovery.” This hints at widespread and permanent job losses. Indeed, Simple Flying reported in August that the general downturn faced by the aviation industry as a result of coronavirus was forcing the airline to consider cutting around 1,000 jobs.
The decreased personnel costs among these groups are said to have been jointly agreed, and are part of a “comprehensive adjustment and cost-savings program.” The plan is set to affect employees at varying levels of Finnair’s structure. The incentives are said to be aimed at both personnel and management. This reflects the carrier’s statement that “securing the company’s future demands a long-term contribution from all Finnair employees.”
Ambitious but well-aligned targets
The payment of rewards from the program is conditional to Finnair achieving a series of performance indicators and financial targets. These are set for the third quarter of 2023. The targets are said to be both ambitious and aligned with the interests of the company and its shareholders.
Should these goals be met across the board, employees participating in the incentive program will be due a payout in Q3 of 2023. This will amount to a maximum of two months’ salary. Whether this is sufficient compensation for a lost job is another matter. However, it does at least recognize their contribution to securing Finnair’s future.
There is also potential for the incentive plan to grow further. The airline states that:
“Finnair has reserved the possibility to offer the incentive program to personnel groups with whom agreements on permanent cost savings have not yet been reached. If such agreements are reached shortly, these personnel groups will take part in the new incentive program under the same conditions as other participants.”
Executive board also affected
Finnair’s executive board is also subject to a performance-based long-term incentive plan. This will see nine initial participants given “the opportunity to earn Finnair shares and cash as a long-term incentive reward.” This group will comprise executive board members and the CEO.
This is, once again, conditional to performance indicators and financial targets being achieved. The period for these goals spans July 2020 to June 2023. It remains to be seen whether or not the program will prove successful. It is promising that Finnair plans to eventually reward employees who have been let go. For their sake, one can only hope that all the necessary targets are met, and Finnair’s future is secured.
What are your experiences flying on Finnair? Do you expect their rebuilding process to be successful? Let us know your thoughts in the comments.