Finnair slashes MRO business by outsourcing to SR Technics

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Finnish flag-carrier Finnair is to axe its engine services activities under a new co-operation with Zurich-based SR Technics, which will also include outsourcing component services.

The decision largely ends Finnair's presence in the maintenance market, which has been unable to structure the business in a way that makes it competitive. It will, however, continue to conduct line maintenance.

Around 80% of the 350 personnel employed in these areas will be cut, says the carrier. Finnair is to discuss the decision with staff representatives.

Finnair abandoned heavy airframe maintenance about a year ago, and had intended to concentrate on higher-margin engine and component services. It has supported General Electric CF6s and CFM International CFM56 powerplants.

But under a memorandum of understanding with SR Technics it will be "discontinuing" its engine services operations and "making major adjustments" to its component services business.

"Our own engine and component services are unfortunately too small in scale to be cost efficient enough in the long term," says Finnair chief operating officer Ville Iho.

Finnair says there is overcapacity in the market - another Nordic CFM56 servicing centre, the Pratt & Whitney facility in Stavanger, is also closing - and competition is "intense".

Partners already provide some of Finnair's engine maintenance and about half of its component maintenance, as well as the heavy airframe work.

"We explored partnership opportunities as well, but there was no interest in the market to form a partnership to continue the operations at Helsinki Airport," states Finnair Technical Services managing director Kimmo Soini.

Finnair expects "significant" cost savings as a result of the decision, part of a broader restructuring for the loss-making carrier.

"Most airlines use partners in aircraft maintenance," says Iho. "This is a natural next step for us as we increasingly focus on our core activities as an airline."