• 

  Finnair

  IATA/ICAO Code:

  AY/FIN

  Airline Type:

  Full Service Carrier

  Hub(s):

  Helsinki Airport

  Year Founded:

  1923

  Alliance:

  oneworld

  CEO:

  Topi Manner

  Country:

  Finland

Like many airlines, Finnair is looking to return to profitability following a difficult couple of years coping with the challenges of the coronavirus pandemic. A key obstacle is its inability to use Russian airspace, which previously allowed it to operate shorter Asia-bound routes. As such, it has devised a new strategy.

The fleet will shrink as a result

In a statement published this morning, Finnair explained that the closure of Russian airspace has weakened its ability to be profitable. This is because its flights to certain Asian destinations have become somewhat longer in order to avoid this airspace, resulting in higher operating costs and even temporary route suspensions.

With Russia still off limits for the foreseeable future, Finnair has come to terms with the fact that it will need to find a way to return to profitability regardless of the airspace closure. This will require "significant structural renewal," with a key aspect being "a reduction of the fleet to optimize for the go-forward network." Commenting on the strategy change, Finnair CEO Topi Manner stated:

"The changes in our operating environment require a new strategy and significant renewal of Finnair, especially related to costs. We have, however, an excellent foundation to build on: our excellent, differentiating product, strong safety culture, strong brand, high-quality execution capabilities, commitment to sustainability, and track record of adapting and renewing ourselves."

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Other aspects

As well as its plans to shrink its fleet, Finnair has also considered several other angles in its attempts to return to profitability. One of these is the implementation of what the airline calls "a geographically more balanced network connecting Europe to Asia, India and the Middle East, and North America via Finnair's home hub Helsinki, including a continued strong domestic presence."

This part of the plan already appears to be coming into place, given that, last week, Simple Flying reported that Finnair would be cutting all five of its long-haul routes from Stockholm Arlanda (ARN) this winter. This reflects its desire, as mentioned above, to channel long-haul traffic through its Helsinki-Vantaa (HEL) hub.

The strategy also has a keen focus on being cost-driven, with a key goal being a 15% unit cost reduction compared to 2019 levels. Finnair hopes that this move will enable it "to be competitive in all markets." Its end goal with the strategy is "reaching the pre-pandemic comparable EBIT level of at least 5% from mid-2024."

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Various cost-cutting levels

It seems as though the strategy may have the potential to impact employees, with Finnair explaining that personnel costs are included in the cost-cutting strategy. The airline adds that it will discuss "adjustments in employment terms," as well as evaluate "route-specific outsourcing of cabin service." Manner adds:

"The target is to build a leaner Finnair that can return to the pre-pandemic levels of profitability. Reaching this will require profound change throughout the company. Especially during the hard pandemic years, the Finnair team has proven its ability to adapt and renew under the most challenging circumstances, and I am confident that we will reach our target as we now continue this journey."

It will certainly be interesting to see what sort of details end up emerging in terms of the exact aircraft being cut, and the routes on which cabin service may be outsourced. In any case, Finnair will hope that these help profitability to return.