Finnair CEO, Mika Vehviläinen, stated the carrier is considering several forms of cooperation with Norwegian Air Shuttle, including joint operation on its existing services in Asia, as part of plans to capture market share from troubled SAS Group, the largest carrier in Northern Europe (CAAC-News, 10-May-2010). Finnair, which reported a loss of EUR120 million in 2009, will focus on ensuring the profitability of its European network.
Finnair seeking ties with Norwegian Air Shuttle: CEO
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European airlines: 1H2016 results show a widening gap between the haves and have-nots
The last of Europe's leading listed airline groups reported 1H2016 results on 19-Sep-2016. This now allows analysis of the aggregate trends for the 15 largest European airline groups listed on the stock market that publicly report financial results for the first six months of the calendar year. These groups account for 53% of ASKs flown to/from/within Europe by all airlines and 71% of ASKs flown by European airlines (week of 19-Sep-2016, source: OAG).
Collectively, these 15 groups enjoyed an improvement in operating margin in 1H2016 versus 1H2015. This was achieved in spite of heavy downward pressure on unit revenue – thanks largely to lower fuel prices, which allowed them to cut unit costs more rapidly. However, there was a wider range of levels of profitability in the individual results compared with last year.
Moreover, in margin terms, there was a trend towards the strong getting stronger and the weak getting weaker. Further, there has been a number of profit warnings in the sector – particularly since the UK's Brexit referendum. This may mean that further improvements in the aggregate results of Europe's listed airline sector will be harder to achieve in 2017.
Finnair accelerates long haul growth based on Europe-Asia niche, thanks to A350 and labour deals
Finnair's 2016 Capital Markets Day on 25-May-2016 was an opportunity to mark the progress made in CEO Pekka Vauramo's first three years at the airline. Since his arrival on 1-Jun-2013 Finnair has completed its entry into the oneworld trans-Atlantic JV and the JAL-BA JV; implemented cost reduction initiatives, including the renegotiation of labour agreements; and taken delivery of its first Airbus A350 aircraft. After falling into loss in 2014, it returned to profit in 2015 and its 1Q2016 results show further progress, although it remains short of Mr Vauramo's medium-term margin targets.
Finnair is now reinvigorating and accelerating its long haul growth plans, based on its niche in Europe-Asia connecting traffic. A target to double its 2010 Asia ASKs by 2020 has been brought forward to 2018, and this can be achieved with minimal additional investment. Through a refocused commercial strategy, Finnair hopes to stay ahead of market RASK performance in a weak unit revenue environment. Through growth, fleet upgrades and improved labour productivity, Finnair aims to make significant CASK reductions. Finnair management certainly appears to be more confident about the future than at any other time in the past three years and more.