Finnair breaks four-year cycle of losses by tapping Asia market
Finnair sits at its hub at Helsinki Airport. Mark McLaughlin / Flickr
Finnair’s move five years ago to see itself as a hub for travel to and from Asia was a prescient one that wisely build on cultural affinities between the Finns and Japan and Korea.
Finnair Oyj snapped a four-year run of annual losses in 2012 as it boosted ticket sales between western Europe and Asia via its Helsinki hub while trimming wage, maintenance and fleet expenses more than anticipated.
The Vantaa-based airline posted net income of 11.8 million euros ($16 million), versus an 87.5 million-euro year-earlier loss, it said today in a statement. Earnings were aided by 100 million euros of savings, 25 percent higher than targeted.
Finnair is building its home base into a hub for travel to Japan, South Korea and China, where it began flying to Chongqing in Sichuan province in 2012 and will add Shiyan in neighboring Hubei this year, together with Hanoi in Vietnam. The carrier has been struggling to post a profit as sluggish European economies and competition from low-cost carriers including Norwegian Air Shuttle AS squeeze margins on its short-haul operations.
“We’ve been able to increase our business and market share with Europe and Asia,” Chief Executive Officer Mika Vehvilaeinen, who is leaving after three years in the job on Feb. 28, said in a phone interview. “There’s still room for improved efficiency. The aim is to question existing practices and to rethink in what ways we could improve our profitability.”
Finnair is seeking to pare expenses by a total of 140 million euros through the end of this year and 200 million euros by the end of 2014 as part of a program that it began in 2011.
The member of the British Airways-led Oneworld alliance boosted its passenger total 9.5 percent to 8.77 million people in 2012 as sales rose 8.5 percent to 2.45 billion euros. It flew 683,600 people in January, 7.2 percent more than a year earlier.
Finnair said Jan. 28 that Vehvilaeinen was leaving to become CEO of Helsinki-based crane and forklift manufacturer Cargotec Oyj. The carrier appointed Chief Operating Officer Ville Iho as interim chief until a successor is appointed.
Editors: Chris Jasper and Andrew Noel.
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