Finnair CEO Pekka Vauramo at the AGM: 2015 marks a new phase for Finnair, fuelled by new aircraft and service renewal
“Year 2014 was a challenging one, but we have good reasons to be optimistic about the future. Year 2015 marks a significant new phase for us”, said Finnair CEO Pekka Vauramo in the company’s Annual General Meeting today.
“We have successfully completed a broad, three-year savings program,” says Vauramo. “Cost control naturally continues, but our focus is now strongly on increasing revenues. We are developing ancillary services systematically based on data collected from approximately 8000 of our customers in Europe and Asia, on what services they want and what they are willing to pay for.”
Vauramo lists new meal services on board, full flat Business Class seats, Economy Comfort seats and the new Light ticket type as good examples of service renewal. In addition the company has begun investing in different digital services.
Fleet renewal brings competitiveness and approximately 1 000 new jobs in five years
According to Vauramo, Finnair's fleet renewal plays a key role in the company's new phase. In the second half of this year, Finnair will be the first European airline to operate the next-generation Airbus A350 XWB aircraft.
“The first long-haul operation with the new aircraft is at the end of October, and Shanghai, Beijing and Bangkok are the first destinations,” Vauramo says. “On these Asian routes we get the most out of our new aircraft. The new aircraft will improve our product, decrease costs and also decrease our CO2 emissions.”
“As the fleet investment program proceeds, our long-haul will start to grow in 2016. We seek growth in traffic and in revenue with these aircraft. As we are now more cost-effective, thanks to our structural changes, I believe we have a strong foundation to produce results with the new fleet,” Vauramo estimates.
“Growth also creates jobs. Every new Airbus A350 XWB aircraft that grows our fleet will create approximately 200 jobs at Finnair. Half of this is flying personnel, and the other half is in other functions,” Vauramo stresses. “Increasing the fleet size by five long-haul aircraft will create approximately 1000 jobs in Finnair in the next five years. The company employed approximately 4500 persons at the end of 2014.
Finnair continues to seek growth in Asia, where the company now has more than 70 flights per week. Economic growth in Asia continues, but there are growth opportunities also in North America. Finnair is opening a new route to Chicago this June.
Successful savings program enabled move towards growth strategy
Klaus Heinemann, Chairman of the Finnair Board of Directors, stressed in his opening speech the importance of reaching collective labor and savings agreements with all personnel groups through negotiations in 2014. “For this, I want to express my sincere and warm thanks to the whole Finnair personnel. We are very fortunate that we are not in the same position as some of our competitors who have struggled with strikes during this and last year,” Heinemann said.
Heinemann also highlighted the significance of 2015. “We are now moving to a new phase, where in line with our strategy, we seek to grow revenue. Even if the changes ahead are positive in nature, they will not be easy, as launching new products and taking new aircraft into use always requires an organization to learn new things and move away from old ways of working. I believe that the Finnair team is well aware of the great opportunities the upcoming changes of 2015 offer us to improve our performance, and the Finnair spirit will support the performance of the team."
Discussion still needed on ownership structure and the financial challenges of domestic flying
Chairman of the Board Heinemann reminded the shareholders of the wish he made last year, and called for continuation of constructive discussion in Finland on Finnair ownership structure and the company's future in the consolidating aviation market: “I believe that Finnair's future matters to the whole Finnish national economy, and hence it would be worthwhile to consider how the good air connections in Finland could best be secured in this consolidating world.”
Heinemann also brought up the challenges of Finnair's domestic flying. “Our business on domestic routes has been financially in the red for a long time,” he said. “I understand the national concern in Finland over maintaining air connections.” Heinemann also said he had familiarized himself with the Finnish aviation strategy published by the Ministry of Transportation.
He pointed out that a responsible Board of Directors has a legal obligation to address the challenge presented by domestic flying. “Finnair has expressed interest in taking part in discussions on the different ways demand for aviation could be stimulated in Finland,” he added. Heinemann also noted that it is important to separate the obligation of the public sector to provide a service, and the obligations of a listed company.
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About Finnair
Finnair flies between Asia, Europe and North America with an emphasis on fast connections via Helsinki, carrying more than nine million passengers annually and connecting 15 cities in Asia with more than 60 destinations in Europe. The airline, a pioneer in sustainable flying, will be the European launch customer of the next-generation, eco-smart Airbus A350 XWB aircraft and is the first airline listed in the Leadership Index of the worldwide Carbon Disclosure Project. The only Nordic carrier with a 4-star Skytrax ranking, Finnair has also won the World Airline Award for Best Airline Northern Europe for the past five years running. Finnair is a member of oneworld, the alliance of the world's leading airlines committed to providing the highest level of service and convenience to frequent international travellers.