Viking Line is to start negotiations with land-based staff in Finland, Sweden, Estonia and Åland in a bid to reorganise their functions.
This initiative is aimed at cutting costs, improve operational efficiency and safeguard the company’s future competitiveness and financial position.
On 24th August, notification of co-operation negotiations was sent out to the Finnish organisation. On the same day, the Swedish section began negotiations in accordance with the Swedish Act on Co-Determination in the Workplace.
“The ongoing coronavirus (COVID-19) pandemic has caused a serious deterioration in the Group’s operating conditions. Since March 2020, operations have been dominated by the travel restrictions introduced, with the consequence being a reduced propensity to travel in the company’s markets.
“For Viking Line, the most important restrictions still in effect concern travel restrictions between Finland and Sweden. The international market has also been drastically affected. It is difficult at present to estimate how long the coronavirus pandemic will last and what the effects will be on Viking Line’s future results, financial position and cash flow.
“In this challenging situation, adaptation measures are unfortunately needed to secure the company’s future operating conditions,” explained Jan Hanses, Viking Line’s President and CEO.
To minimize the negative effects caused by the pandemic, Viking Line will reorganise its land-based organisation. The negotiations will affect all of the company’s land-based staff of about 570 people in Finland, Sweden, Estonia and Åland.
Planning for the new reorganisation is expected to lead to restructuring, downsizing, centralisation and streamlining of some functions, as well as changes in some employees’ job descriptions to better meet the company’s current and future needs.
The planned measures are expected to result in a shift to part-time jobs, layoffs or redundancies for up to 200 people. If there are any redundancies, Viking Line said that it will fulfil its obligation to re-employ staff in accordance with laws and collective agreements.
Negotiations will begin on 1st September in Finland and Åland and are expected to last for six weeks. Similar negotiations will take place in Estonia.
Illustrating the company’s need to take action, in the first half of this year, sales amounted to €97.5 mill, compared with €227 mill in 1H19.
Income after taxes totalled a loss of €23.7 mill, compared with a loss of €8.7 mill in 1H19.
In the second quarter of this year, sales totalled €22.6 mill, compared with €131.1 mill in 2Q19.
Hanses said; “Interim results were affected by unforeseen external factors in the form of a global pandemic. The COVID-19 pandemic’s impact on society was increasingly apparent during the second quarter, and the virus has continued to affect individuals, companies and markets. The second quarter of the year was completely dominated by the travel restrictions introduced in March and gradually eased starting in mid-May.
“At the end of the quarter, in the middle of Viking Line’s peak season, the restrictions on travel between Finland and Sweden were still in place. As restrictions were gradually eased, with travel restrictions applying only to Sweden at the end of June, all of the company’s vessels resumes service, although the vessels that usually sail between Helsinki and Stockholm operated on partly new routes.
“Despite restrictions on operations, we have maintained uninterrupted passenger and cargo service between our countries and thus ensured a traffic pattern that has been in effect for more than 50 years and will continue.
“During the second quarter, our measures were focused on securing the company’s liquidity by adjusting costs and on making different financial arrangements with our lenders. Employees have shouldered a heavy burden with the furloughs carried out in all the countries we operate in. Some furloughs were part-time but most were full-time. Our employees’ engagement as these jobs were being organised has been admirable. I really appreciate their considerable efforts during these tough times.
“During the period 19th March to 18th June, 2020, the company received aid from Finland’s National Emergency Supply Agency to maintain cargo service between Finland and Sweden, Åland and Sweden, and Finland and Estonia. The payments covered variable traffic costs and some fixed costs but were reduced by revenue from cargo traffic and the contribution from passenger traffic. The payments were thus effective and self-regulating. We also received aid from the Åland provincial government.
“Our liquidity at the end of the second quarter was satisfactory and was subsequently further strengthened to some extent. Negotiations with our financiers are ongoing and are expected to be completed during the third quarter. To ensure safe procedures in these exceptional times and to bolster our passengers’ faith in our service during the COVID-19 pandemic as well, Viking Line was the first shipping company in the world to be verified by the accredited classification society DNV GL’s verification, which covers all seven of Viking Line’s vessels and operations in six terminals, and validates our ability to manage and mitigate infection risks, including for COVID-19.
“These steps to prevent infection have worked effectively, and our measurements show that customers view them positively. However, it will still take time before demand in our markets gradually builds. Viking Line and our employees are prepared to shoulder the responsibility required in order to re-establish our customers’ faith. In this respect too, our employees’ engagement has built an enormous amount of trust.
“I am pleased that we have quickly reacted to the crisis and adjusted operations to a changed market situation. Despite some signs of optimism, it is still difficult to determine the market trend going forward. We intend to continue focusing on what we can affect in these challenging times: selling travel experiences and cargo services, serving our customers, safeguarding our employees’ health, running our operations as efficiently as possible, ensuring our financial sustainability and moving forward with our newbuilding,” he said.