Starting in October, Flybe will operate the 12 Embraer 190s on Finnair routes, for Finnair. According to the two carriers, the move forms part...

Finnair and UK regional airline Flybe are extending their cooperation to offer cost-efficient European connections for Finnair’s passengers.

After forming Flybe Nordic AB (of which Flybe owns 60 per cent and Finnair 40 per cent) in 2011, the companies have now signed a memorandum of understanding (MOU) under which Finnair will transfer twelve 100-seat Embraer 190 jets to Flybe.

Starting in October, Flybe will operate the 12 Embraer 190s on Finnair routes, for Finnair. According to the two carriers, the move forms part of Finnair’s efforts to improve the profitability of its European network, and it offers a platform for growth for Flybe Nordic.

Finnair's short-haul fleet includes 12 Embraer 190 regional jets, each seating 100 passengers. However, Finnair has agreed to transfer operation of the aircraft to UK regional carrier Flybe (a joint-venture partner of Finnair's in Flybe Nordic). Flybe will operate the Embraer 190s on Finnair routes and on behalf of Finnair

“This move is a part of our strategy to restore Finnair’s profitability”, says Mika Vehviläinen, Finnair’s CEO. “The MOU covers approximately one-third of our European flights. 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.”

“Today’s announcement marks another step in our journey of growth, as we extend further our contract flying operations for Finnair,”says Mike Rutter, managing director of Flybe Europe. “The extension of the contract-flying business is a key part of Flybe Finland’s strategy, providing the business with a good balance of risk.”

The airlines say that from the customer’s viewpoint the change will be virtually unnoticeable. Finnair continues to be responsible for sales, marketing and customer support for the flights on its network and under its flight code, but the flights will be operated by Flybe.

Once the agreement is completed, the 12 Embraer 190 regional jets and the routes they operate will transfer from Finnair to Flybe. In connection with this business transfer, cabin attendants and pilots for the Embraer 190s will transfer with the business, unless otherwise agreed in negotiations with Finnair personnel.

Finnair says negotiations on cost savings between it and the Finnish Airline Pilots’ Association “have proceeded in a constructive manner during the spring”.

If the cost-savings agreement now under preparation is completed, pilots transferring to operate Flybe flights would return to Finnair in stages to be trained as Airbus A330 and A340 pilots for Finnair’s growing Asian long-haul network.

Finnair says it is on track with its transformation program, which targets annual savings of €140 million ($179 million) to restore profitability and improve competitiveness.

The carrier is continuing to seek to improve the profitability of the remainder of its European business. Alternatives include decreasing costs in cooperation with Finnair’s own staff, or forming additional partnerships with other companies.

Finnair announced on August 5, 2011 that it targeted decreases in its annual costs of €140 million by 2014. According to Finnair, the company’s restructuring moves to date have included:

● Choosing Swissport as its partner for baggage and apron services;

● Optimizing the size of its European fleet, discontinuing the leases of four Airbus A320-family jets and subleasing five Embraer 170 regional jets;

● Signing an MOU on the sale of its catering business to LSG Services;

● Signing an MOU with SR Technics on engine and component services;

● Seeking solutions to improve the profitability of its European network;

● Improving its route planning and aircraft utilization;

● Streamlining its support functions, marketing and distribution activities; and

● Initiating numerous other savings measures throughout the company.