Finnair: Japanese JV to the rescue for the new nonagenarian following profit warning

Finnair celebrates its 90th birthday on 1-Nov-2013, making it one of the world's oldest airlines. It also has one of the newest CEOs, Pekka Vauramo, who joined on 1-Jun-2013.

Finnair's strategic niche is based on using its Helsinki hub to connect Europe with Asia. While it saw traffic growth and market share gains in both regions in 3Q2013, the weakness of the yen led to a collapse in Asia revenues. The approval on 16-Oct-2013 of Finnair's application to join the BA/JAL revenue-sharing joint venture on routes between Europe and Japan could not have come at a more opportune moment. The resulting coordination of pricing and schedules should help to counter revenue weakness.

Nevertheless, the fall in Finnair's 3Q2013 profits and its consequent profit warning for the full year highlight the scale of the challenge facing Mr Vauramo. Although Finnair achieved a further reduction in unit costs, he will need to push through more cost cuts, while simultaneously seeking to shore up unit revenues.