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- Finnair Plc
Tietotie 11 A (Helsinki Vantaa Airport)
- Main hub
- Helsinki-Vantaa Airport
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- Full Service Carrier
- Domestic | International
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- Part of Finnair Group
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BRA - Braathens Regional Airlines
CSA Czech Airlines
Finnair is the national carrier of Finland and majority-owned by the Finnish government. Operating from its hub at Helsinki, the carrier and its subsidiaries handle the majority of domestic and international air travel in Finland. Finnair’s network includes regional services within Finland and Scandinavia as well as international services 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
129 total articles
The summer 2016 season came to an end on 29-Oct-2016. Adjusting for an extra week relative to the previous summer, it produced seat growth of 6% for capacity to/from/within Europe, matching the rate of growth in summer 2015, but higher than the 10-year average rate of 4% and higher than any other summer since 2010.
Current indications from data filed with OAG are that Europe will also experience accelerating capacity growth in the winter 2016/2017 season, which runs from 30-Oct-2016 to 25-Mar-2017. Adjusting for the season being shorter by one week relative to last winter, total seat growth in Europe is set to reach 7%, compared with 6% growth in winter 2015/2016 (and 6% growth in summer 2016). This is higher than the 10-year average rate for winter of 3% and the highest winter growth since 2007/2008.
On routes to all but one region from Europe, seat growth this winter will both be faster than last winter and higher than its 10-year average. The one exception is Europe to Middle East, the fastest-growing region, where capacity growth will remain at 10%. This report presents analysis of this winter's seat growth for Europe by region and by airline group.
Asia-Europe, which is one of IATA's big four international markets, has become the slowest-growing. The market underwent RPK expansion of only 1.5% in Jul-2016, the latest data available. Uncertainty in Europe and terrorism fears mean that some Asian travellers choose Australia and North America or, as IATA has flagged – travel within Asia, which has expanded by nearly double digits.
Although market expansion was slow in the first part of 2016, so too was capacity. Yet this changed in Jul-2016 as capacity increased more quickly, perhaps as airlines expected a stronger summer. Despite slow passenger growth, dynamics are highly varied – except for yield declines. The combined RPK growth of IAG (7.2%) Cathay Pacific (3.7%) and Finnair (8.7%) was not enough to offset the contraction of the largest airline in the market, AF-KLM (7.9%).
From the reported geographic data by all major airlines, load factors are falling.
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.
Part 1 of this report on Aeroflot's connecting sixth freedom traffic noted that Aeroflot is the 13th largest carrier of passengers between Western Europe and Northeast Asia, whereas Finnair – whose "Nordic Shortcut" strategy is well-known – is slightly larger and is the 10th largest operator. After Emirates, Aeroflot is the largest airline flying passengers between the regions but is not based in either of them; all the other operators are Western European or Northeast Asian airlines.
This second and final part examines Aeroflot's growing connecting market in depth. Of the airline's connecting Western Europe-Northeast Asian passengers, 54% are travelling to/from mainland China. This correlates with the share of Aeroflot capacity allocated to China. Among Finnair, Turkish and the Gulf 3 "superconnectors", Aeroflot has the fewest destinations in Northeast Asia. Yet its frequency in prime Chinese cities is unmatched. Aeroflot has the benefit of good aeropolitical relations with China while benefitting from other airlines being restricted over Chinese airspace. This may appear to be a short term advantage that will reduce as competition grows.
Yet a review of the city pairs where Aeroflot is the strongest on transfer traffic indicates growth opportunities as more markets are incorporated into JVs and complacency settles in. This may increase already tense relations between Aeroflot and its SkyTeam partners. Pursuing stronger transfer traffic will be a delicate decision for Aeroflot management.
One swallow does not make a spring and nor does a rash of aviation strike news guarantee a turning point for the aviation industry. But the signs are ominous. In the month of Jun-2016 (to 20-Jun-2016), there have been 136 articles on CAPA's website mentioning the word 'strike'. This compares with 81 for the first 20 days of Jun-2015. For 2016 so far (1-Jan-2016 to 20-Jun-2016), the 's' word has occurred in 594 articles – about 20% more than in the same period in each of the past two years. If this rate continues, 2016 could be the biggest year for strike-related articles since before the global financial crisis.
The vast majority of the Jun-2016 articles – 80% – relate to Europe. A significant source is air traffic control disputes, particularly French ATC. There have also been strikes and/or strike threats involving airport workers and ground handlers. Among European airlines, Air France has generated the most coverage for its ongoing dispute with its pilots, and it may also face a cabin crew strike. Lufthansa has not yet faced a strike by its employees this year, but has not yet reached new agreements with pilots or cabin crew after industrial action last year.
History tells us that labour's demands grow as profits rise. The apparent increase in industrial action this year could be a signal of an approaching peak in the airline profit cycle. There are other causes of unrest, such as impending French labour legislation, but the correlation reflects some history.
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.