Finland's government is forcing the country's flag carrier Finnair to overhaul its board after a scandal over executives' benefits, a minister said on Thursday.

Heidi Hautala, the minister responsible for state ownership in Finnish companies, said six out of eight board members will be replaced due to lack of openness in decisions regarding management compensation made in 2009.

I think the credibility of the company has been damaged, Hautala told Reuters. So now the only chance for me is to take very drastic measures and renew most of Finnair's board.

Finnair, 55.8 percent owned by the Finnish government, acknowledged the decision.

The airline has faced an uproar over executives' compensation, particularly over bonuses for top officials during a time when the company was implementing job cuts. Police have also launched an investigation into the CEO's real estate dealings.

The series of scandals come as the company is trying to end its loss spiral by reorganizing its short-haul flight business in Europe.

Hautala admitted the scandals made it more difficult for Finnair to deal with its strategic troubles.

This is the only way to guarantee that we can come back to the discussion on Finnair's strategy, Hautala told Reuters.

Hautala said Finnair Chief Executive Mika Vehvilainen would remain in his position for now, but added that could change depending on a police inquiry.

Shares in Finnair were 1.3 percent higher at 2.34 euros by 1122 GMT, while the general Helsinki bourse index <.OMXHPI> was flat.

(Reporting by Eero Vassinen; Editing by Mike Nesbit and Hans-Juergen Peters)