Finnair’s strategy is working – Risk looms ahead

When Finnair presented its long-awaited new strategy a year ago in November, few believed that it would lead the company to such a good performance as what is seen now.

The company’s profitability has improved, demand is strong and earnings are growing.

The last few years have been notoriously difficult for Finnair. The company’s competitive advantage was based on the Asian strategy for a long time and the exceptionally strong structural advantage it brought. Then the war of Russian aggression ended all this suddenly and unexpectedly.

Finnair had to develop a new vision in a situation where it was just recovering from the corona era. Last year was also weighed down by persistent labor disputes.

Finnair’s current strategy can be considered realistic but also modest. The cornerstones of the strategy are the loyalty program and investing in additional services and retail sales.

Geographically, in addition to Finland, the strategy focuses on traffic in Europe and the North Atlantic.

In any case, Finnair’s new strategy seems to be working. Traveling is popular again when people want experiences. And although plane tickets have become more expensive in recent years, that has not weakened demand.

Key factors in Finnair’s well-run year have been success in fuel protection.

A year ago, Finnair was far wiser and extended its fuel protection horizon to two years, which has proven to be an excellent game move. Aviation fuel is one of the biggest expenses for the airline, and the sharp rise in fuel prices this year has driven many of Finnair’s competitors into difficulties and even canceled flights.

The big question for the near future is whether Finnair manages to protect its fuel costs as well in a geopolitically uncertain environment.

The company recently announced in connection with its earnings announcement that its average hedging ratio for next year is 34 percent, while it has been more than 70 percent. If fuel costs rise, ticket prices can also be expected to rise.

Finnair’s newest route openings have been scheduled flights to Turku and Tampere.

The company decided to discontinue these Kotoisa destinations three years ago, but now it flies to them again. The motive is the desire to serve especially customers who need further connections.

Finnair’s network of domestic destinations will continue to expand in 2028. As a continuation of Turku and Tampere, Finnair will then launch commercial flights to Jyväskylä, Joensuu, Kajaani, Kemi and Kokkola. The company plans to plan the timetables for further connections through Helsinki.

When Finnair starts operating to five provincial cities in the future, Finnair’s commercial flights will replace state-subsidized provincial flights. This is a reasonable and healthy development for Finland and shows that a national airline in good condition is an advantage for the whole country.