Finnair will outsource its cabin crew on approximately 20 long- and short-haul routes over the next two years, leading to job cuts, after union talks failed to hit its €18 million ($24 million) cost-cutting target.

On March 27, Finnair began talks to slice €18 million from its annual cost base with Finnish Cabin Crew Union SLSY, but these concluded May 26 without an agreement. SLSY proposed just €11.7 million in cuts (€2.9 million permanent savings, €4.8 million over the next 20 years and €4 million in temporary savings for a one-year period) in return for two years’ protection against layoffs.

“Unfortunately, this is too far from the savings that Finnair requires,” Finnair COO Ville Iho said. “We cannot continue with our current cost structure, which is why we need to make instant, permanent changes to it. We proposed a solution that would see €12 million of the cost reductions implemented immediately and the remaining €6 million over a longer period of time. Even this compromise did not lead to an agreement,” Iho said.

Over the two-year period, Finnair said it needs to cut approximately 540 man years through a combination of redundancies, shifts to part-time work and temporary layoffs.

“The aim is to outsource one to three routes within this year. The timetable for the implementation of the plans and the related impacts on personnel will be determined in stages as negotiations with potential partners move ahead,” Finnair said in a statement.

The airline is now pressing ahead to create a subsidiary to supply cabin services and is in talks with potential outsourcing partners.

“We expect to conclude our first agreements in the third quarter and outsource our first routes in the fourth quarter,” Iho said. “There are potential partners in Finland, elsewhere in Europe, as well as Asia. Each instance of route outsourcing requires careful negotiation and planning to ensure the best possible service quality and compatibility with the rest of our operations. For this reason, we will be proceeding with outsourcing in stages,” he said.