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Finnair: Finnair’s strategy review: Asia Strategy Remains at the Centre – Savings and Increased Productivity Necessary

May 10, 2014 Aviation No Comments Email Email

As a part of its annual strategy work, Finnair’s Board of Directors has approved strategic targets and an updated mission for the company.

Finnair’s mission is to offer the smoothest connections in the northern hemisphere via Helsinki and the fastest and best network to the world in its home market, as well as to create value for shareholders by providing an attractive return on investment.

Finnair’s strategic objectives are to:

• Double Asian revenues by 2020 from the 2010 level

• Grow traffic via Helsinki by utilising Finland’s geographic locationDusit-Hot-Deals-Banner-250x250-06

• Create shareholder value and be an attractive investment.

By taking advantage of the growth of Asian markets Finnair has the ability to grow as well – if it succeeds in its ongoing structural change and cost saving program. Finnair’s Board of Directors gives its full support to this program. Finnair’s long-term target is 6 per cent operational profit, which would allow the company to invest in the future and provide a return on capital employed higher than its cost.

Asian traffic enables good connections from Finland

Along with taking advantage of Asian market growth and developing the Helsinki hub, the key elements of Finnair’s strategy include the renewal of commercial activities and processes and the development of new digital services for passengers. With these initiatives Finnair seeks additional revenue and aims at creating additional value for customers by improving the service experience.

Finnair’s strategy of developing transfer traffic via Helsinki also offers Finns excellent air connections that would not otherwise be commercially possible due to Finland’s small population. This benefits Finnish business and leisure travellers, the Finnish economy and especially the Finnish travel sector.

Operations at Helsinki Airport to be developed flexibly

As part of preparations for growth, the company must consider how it will develop its network in Asia, Finland and Europe without bottlenecks so that traffic can be handled flexibly with smooth and cost-efficient connections.

Finnair’s home base at Helsinki Airport has an important role in Finnair’s strategy. As part of its hub development, Finnair will examine different options to organize its bank structure so that Helsinki Airport can be utilized as flexibly and cost-efficiently as possible when traffic increases.

Investments in fleet necessary to improve competitiveness

Finnair’s strategy also calls for modernization of its fleet. The Airbus A350 aircraft ordered by the company, with deliveries starting in the second half of 2015, are absolutely critical as they represent a next-generation step-change in fuel efficiency over the aircraft they will replace. In addition, the company must solve its current profitability issues in European flying, which among other things requires reviewing the renewal alternatives of the narrow-body fleet in the near future.

In addition to developing its passenger traffic, Finnair aims to further develop its cargo business. Cargo demand between Europe and Asia tends to track closely with economic growth, and Finnair intends to take its share of this growth by taking advantage of the additional cargo capacity offered by the new wide-body aircraft.

Building on existing strengths

By implementing its strategy, Finnair aims at being able to determine its own future in the rapidly changing market and consolidating industry. The company must develop its operations in order to remain competitive. At the same time it must maintain and further strengthen its traditional strengths: world-class operations, a strong safety culture and good customer service.

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