The board of the German airline Lufthansa has cancelled a planned buyout of the catering operations of the Finnish airline Finnair. The reason for the cancellation was an investment ban linked with Lufthansa's current cost-cutting efforts.
"Finnair will now concentrate on improving the profitability of its catering unit, which prepares meals served in flight. At the same time we will continue to evaluate alternate arrangements", said Anssi Komulainen, Finnair's director responsible for customer service.
The idea of selling the catering unit was part of an ongoing belt-tightening programme at Finnair. Last year the turnover of the catering unit was EUR 80 million. The letter of intent involved Finnair Catering and Finncatering, which employ about EUR 650 people.
The planned deal would have been part of a cost-cutting effort aimed at permanent cuts in expenses worth EUR 140 million by 2014. The airline says that the cancellation of the deal will not alter the goal of cutting costs or its schedule.
Just over a week ago Finnair signed a letter of intent with the British airline Flybe, under which Flybe would get 12 Embraer aircraft now operated by Finnair, and Flybe is to operate the planes on Finnair's behalf from October.
As part of efforts to save money, Finnair has trimmed its fleet, transferred its luggage and apron services to Swissport, and has signed a letter of intent with SR Technics for engine and equipment services. Finnair has also lightened its administration and has started a number of smaller savings programmes.
Lufthansa embarked on a cost-cutting programme of its own in the early part of the year, aimed at savings of at least EUR 1.5 billion by 2015. Staff is to be cut by 3,500. Lufthansa's turnover increased in the January-March period to EUR 6.6 billion. The company posted a loss of EUR 397 million.
HELSINGIN SANOMAT