By Mike Malik, Chief Marketing Officer, Cirium

On July 21st, at the prestigious Airline Strategy Awards in London, I had the privilege of meeting Mr. Ole Orver, the Chief Commercial Officer of Finnair. Mr. Orver was there to accept the 2024 Executive Leadership Award for the European region on behalf of the Finnair team. Inspired by this encounter, I want to share insights into Finnair’s journey and transformation over the past few years.

Like all airlines, Finnair was hit hard by Covid-19. It was unique, however, in getting hit with a second major blow just as Covid was starting to fade. In 2022, the Russia-Ukraine war meant Finnair could no longer fly through Russia’s airspace, disrupting its routes to Asia. It wasn’t the only airline affected. But for Finnair, Asia was critical. Its Asian network was a powerful competitive advantage and the key driver of its profitability. Suddenly, flights took a lot longer to get from Finnair’s Helsinki hub to cities like Tokyo, Hong Kong, and Singpaore.

Remarkably, Finnair found a way out of its dilemma. Last year, it earned a EUR 254 million net profit, a nice way to celebrate its 100^th anniversary! In fact, the company achieved its target of a 5% operating margin approximately 12 months ahead of schedule.

Finnair’s turnaround story started with a new business plan announced in the fall of 2022, a few months after the Russian airspace closure. It said at the time, “We now must compete without geographical advantage.” Before, flying through Helsinki was a convenient shortcut for many journeys between Europe and Asia. Now it had to compete in markets where it had less of a competitive advantage.

It reacted by cutting costs, leasing out some of its excess planes, enhancing its digital services, increasing ancillary sales, investing in new product upgrades, and working with its oneworld alliance partners. With Qatar Airways, it formed a joint venture, in which the Gulf carrier agreed to purchase passenger seats and cargo space on new routes between Doha and Scandinavia. Finnair added new flying to India as well.

The momentum continues. Finnair reported a EUR 18 million net profit for the April-to-June period of 2024. It said furthermore that it will generate another operating profit for the full year.  

The airline is now led by a new CEO, Turkka Kuusisto. He’ll look to maintain the success of Finnair’s turnaround, in the face of many intense challenges.

These include cost inflation, high interest rates, geopolitical tensions, slowing demand, and tough competition. In addition, Russia’s airspace remains closed and some markets like China are still far from recovered.

Finnair is still significantly smaller than it was before Covid. As Cirium’s Diio airline planning system shows, the airline is flying 14% fewer seats in this year’s July-to-September quarter than it was five years earlier. One reason for this is that Russia used to be one of its largest markets.

Finnair in 2019 flew to five Russian cities (Moscow, St. Petersburg, Kazan, Samara, and Yekaterinburg). It no longer flies to any of these.

Between Helsinki and Asia, meanwhile, seat capacity is down by 46% from 2019. The decline is 90% for China, where it now serves only Shanghai. It previously flew to Beijing, Guangzhou, Xian, Chongqing, and Nanjing.

Finnair shifted some of its widebody flying to North America, where it’s still smaller that it was pre-Covid but only by 3%. It even added new routes like Dallas-Fort Worth and Seattle, to go along with New York JFK, Los Angeles, and Chicago. On the other hand, it hasn’t reentered San Francisco.

Cirium Diio can also identify Finnair’s largest markets in Europe outside of Finland. Number one, measured by total seat capacity, is Germany. That’s followed by Sweden, the U.K., Italy, Denmark, Norway, and Poland. Japan and China ranked in the top five before Covid, with Russia not far behind.  

Finnair’s transformation since the twin crises of COVID-19 and the closure of Russian airspace is nothing short of exceptional.

Their resilience is a testament to outstanding leadership and a dedicated team. It’s a turnaround story that both Mr. Orver and the entire Finnair team can rightfully take immense pride in.