Finnair to lean on alliances to return to profitability

Finnair to lean on alliances to return to profitability

Finnair (FIA1S.HE) will reduce its fleet, cut costs and seek to build a geographically more balanced network by increasing cooperation with partner airlines, the Finnish flag carrier said on Wednesday in a new strategy to return to profitability.

Finnair has been working on a new strategy and seeking new commercially-feasible routes since the closure of Russian airspace due to the war in Ukraine cut off its previously lucrative Asian connections via a short northern route.

The company, headed for a third straight annual loss, had said it needed a new strategy to address high fuel prices, the pandemic and the impact of war in Ukraine.

“Now we need to get along without the geographic competitive advantage and adapt to the reality that geography has changed, the Russian airspace is closed,” Finnair’s Chief Executive Topi Manner told Reuters.

To adapt, Finnair will seek to reduce costs in order to enter new, more competitive markets such as the Middle East where there is less regulation, Manner said.

The company is seeking additional savings of the same scale as the 200-million-euro ($198 million) programme it has already completed, he said.

The cost savings include reductions to Finnair’s fleet, to be decided later according to demand, Manner said.

“For our long-haul fleet, it is clear that we will continue operating our Airbus 350s but also the Airbus 330s because they are part of our recently announced Qatar cooperation,” he said.

Finnair said it would aim to build a more balanced network connecting Europe to Asia, India and the Middle East, and North America via its home hub Helsinki.

“The oneworld alliance will be increasingly important in our strategy,” Manner said, adding the company would step up its cooperation with partners such as Japan Airlines (9201.T), China’s Juneyao Air (603885.SS), Qatar Airways, American Airlines, British Airways and Alaska Airlines (ALKAIR.UL).

The Qatari capital Doha’s importance as an air traffic hub will grow, he added.

At the end of August, Finnair said it would establish “a long-term strategic cooperation” with Qatar Airways to open new routes from Nordic capitals to the Qatari capital Doha.

($1 = 1.0094 euros)