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- Finnair Plc
Tietotie 11 A (Helsinki Vantaa Airport)
- Main hub
- Helsinki-Vantaa Airport
- Business model
- Full Service Carrier
- Domestic | International
- Airline Group
- Part of Finnair Group
- Joined Alliance
- Association Membership
- Codeshare Partners
CSA Czech Airlines
The national carrier of Finland, Finnair is based in Helsinki and is majority-owned by the Finnish government. The airline and its subsidiaries dominate the domestic and international air travel market in Finland. Finnair’s network includes regional services within Finland and Scandinavia as well as flights to Europe, Asia, United States and Canada. Finnair is a member of the oneworld alliance.
Location of Finnair main hub (Helsinki-Vantaa Airport)
Finnair share price
1,386 total articles
110 total articles
Finnair is raising the competitive stakes in using its Helsinki hub to offer the quickest connections between Europe and Asia and in 2015 will have about 10 flights a day to North and Southeast Asia. Before Finnair arrived in Asia in 1976, there was SAS, which commenced Asian flights in 1949 and held the title for all sorts of records and unique operations. But Finnair started to catch up, and it – not SAS – was the first to fly non-stop from Europe to China. A decade ago, Finnair had only a slight edge over SAS in Asia but now Finnair has three times the number of flights and four times as many seats as SAS in Asia.
Strong and active unions and an unwieldy ownership structure, together with an inefficient fleet, have hobbled SAS, but it is hoping to make some inroads in Asia, although opportunities will be limited. A new Stockholm-Hong Kong service opens in Sep-2015 while a nascent partnership with Etihad lays the groundwork for closer cooperation in the future and when Etihad commences services to Scandinavia. Emirates and Qatar already serve the region. SAS' Asian network is largely out of Copenhagen, and the airline probably would hope the Stockholm departure for Hong Kong will limit Finnair's poaching of Swedish traffic.
The economic backdrop in Western Europe was sluggish in 2014 and remains fragile into 2015. In particular, the eurozone nations continue to struggle to recover fully from the global recession. A Jan-2015 poll of economists conducted by the Financial Times suggests that most experts expect GDP growth in the eurozone to be around only 1% in 2015.
This is a little better than 2014, but well short of the cyclical peak growth rates in excess of 3% that have not been seen since 2007.
For 2015, the two most important strategic issues facing Western Europe’s legacy airlines, particularly the Big Three flag carrier groups, will be restructuring in their core businesses and maximising their low-cost vehicles.
Finnair's net loss for 2014 was its first since 2011, but its fifth in the seven years since 2008. Over the past decade or so, losses have been more common than profits. Its niche in connecting Europe with Asia via Helsinki has placed Finnair among Europe's top twenty airline groups, although Finland ranks outside the top twenty countries by population.
But converting this niche into sustainable profitability is proving a major challenge. Whenever Finnair makes progress with cost reduction (and it has made major strides with labour productivity), it seems that revenue pressures wipe out those benefits. In 2015, Finnair anticipates a further drop in unit revenue, reflecting the highly competitive nature of its markets.
This year will also present opportunities for Finnair to build a more solid base. It will be the first full year under new labour agreements and with a number of product improvements in place. It will also see its first A350 delivery. Lower fuel prices are a stroke of luck, but Finnair needs to ensure it can be profitable without relying on this good fortune.
Air Canada during the last couple of years has worked diligently to repair its balance sheet, improve its leverage and reduce costs; as a result it is now beginning to enjoy some of the fruits of its labour by meeting its return targets and sustaining liquidity well above its minimum threshold.
The Canadian flag carrier has also undertaken a network revamp that includes the creation of its low cost subsidiary rouge and a push into long-haul international markets, leveraging its position as Canada’s leading global airline.
But Air Canada faces challenges as it works to sustain profitability from its familiar foe WestJet, as well as potential new entrants eager to execute the ULCC model within Canada. The airline will no doubt have focussed on these threats, and be aware there is still much to prove as its efforts to transform its business continue.
This CAPA analysis of Air Canada's strengths, weaknesses, opportunities and threats continues a series on global airlines.
The very end of 2014 was one of the most important parts of the year for Gulf airlines as they received new aircraft: the world's first A350 for Qatar Airways, which took its first A380 a few months prior, while Etihad received its first A380 and 787-9. These are more than just new toys: they bring improvements both operationally and customer-facing. The Gulf has been building up high-end premium products and the new aircraft cement the region's position of offering some of the best, if not the best, products.
Gulf airlines once sold on the basis of price and often convenience. As they expand their networks and build frequencies they are now moving into higher-end premium cabins, strengthening loyalty programmes, constructing new terminals and airports and have hubs with an increasing number of local activities for a stopover. Meanwhile in the old world airports are becoming more constrained, politicians remain ineffective and uninterested and legacy airlines are slow to invest while facing unpredictability from staff strikes. This brings a change to Gulf carriers that is actively welcomed by passengers; but protectionist rhetoric and use of regulatory constraints is increasing.
At its Capital Markets Day in late Nov-2014, Flybe asserted that it "does not compete with low cost carriers, flag carriers or mid-haul leisure airlines". Moreover, our analysis shows that it rarely competes with other regional airlines. In fact, Flybe faces no competition of any kind on 78% of its city pair routes in its Dec-2014 schedule. Moreover, it is Europe's largest independent regional airline and Europe is the world's largest regional market.
In spite of these advantages and what looks to be a relatively efficient cost base by comparison with other European regional airlines (according to our analysis), Flybe has yet to re-establish sustainable levels of profitability. Much has been achieved since the change of senior management in 2013, but the regional airline's fundamental CASK disadvantage will remain a challenge even as it increases its focus on turboprops rather than regional jets.