Loss in business leads to Arctia CEO resignation

Losses in state-owned icebreaking company Arctia have led to the resignation of its CEO Tero Vauraste.

Arctia has been losing money for several years in the efforts to find offshore business opportunities for its combo-icebreakers in Arctic waters. The company's chairman Pertti Saarela told local media on Wednesday the board had concluded that a new CEO was needed.

Mika Lintilä, Minister for Economic Development, said last month that the state cannot continue "pumping money into Arctia". The company launched legally mandated talks with the staff about downsizing in November.

Besides his CEO role, Vauraste is the chairman of the Arctic Economic Council, an auxiliary group assisting the intergovernmental Arctic Council. Finland is currently the chairman of the Arctic Council until next spring.

In the 1990s, Arctia added to its fleet of traditional icebreakers two specialized ships that could, besides icebreaking, assist in offshore drilling operations through ploughing the sea bed and towing away masses of ice.

However, the ships have been making losses, except when working for Shell International in 2012-2014 in the Arctic Sea north of Alaska.

The original idea had been that income from off shore work during the summer would ease the cost of winter ice breaking in Finnish waters.

Vauraste said this November that the high Finnish cost structure undermines the competitive edge of operations. He said foreign competition uses "flags of convenience" that allow lower costs.

Finland's national broadcaster Yle said the cost level of Arctic combo ships is 30-40 percent higher than what competitors tender. Shell had chosen Arctia in 2012 as no others were available. In 2017 one of the icebreakers made a promotional tour in northern Pacific down to South Korea, but no new customers were obtained.

The main duty of Arctia is to keep Finnish sea lanes open during the winter season. Those services are purchased from Arctia by Finnish transport authorities which in turn charge shipping lines. The company said the downsizing plans are to secure the core operation off Finland.