Page last updated at 16:58 GMT, Thursday, 12 June 2008 17:58 UK

Finnair axes jobs to reduce costs

Like other airlines, Finnair is struggling with record oil prices

Finnair is to cut 500 jobs to counter a drop in demand for its services and the spiralling cost of fuel.

The rising cost of oil has meant Finnair's fuel bill will increase by 160m euros (126.7m; $246.9m) compared with last year.

Airlines have been struggling with record oil prices and a number have cut services and jobs to counter costs.

The Finnish airline's shares fell to their lowest level for three-and-a-half years before later recovering.

At the close of trade in Helsinki its shares were 5.16 euros, up just 1 euro cent.

Finnair said it required additional cuts of at least 50m euros per year to ensure its growth strategy.

The airline, which is majority-owned by the Finnish state, employs about 9,500 people.

It has not said where the job cuts will be made.

Decreased demand

Like other carriers, Finnair has struggled to cope with the spiralling cost of oil, which reached a record of more than $139 per barrel last week.

It has also experienced a drop in customer demand, with consumers hit by rising food and fuel prices and subsequently cutting down on non-essential spending.

The airline said the slowdown had particularly affected domestic, European and Chinese routes.

"Demand has decreased and this decrease has accelerated at such a rate in the past few weeks that, together with the price development of fuel, Finnair's result-making capability has significantly weakened," said a statement by Finnair senior vice president of human resources, Anssi Komulainen.

Last month the Finnish flag carrier said profits would be down on last year and its May passenger load factor - measuring how full an airline's seats are - was down 7.3% year-on-year to 65%.

Carriers worldwide have pursued a range of measures to try and boost revenues to counterbalance their higher fuel costs.

These have included grounding some of their planes and charging passengers for checking in bags.

Shares in Finnair were 2.9% lower at 5 euros in afternoon trading.

United Airlines cuts 100 planes
04 Jun 08 |  Business
Sky-high fuel hurts US airlines
23 Apr 08 |  Business
Ryanair increases travel charges
05 May 08 |  Business

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