Finnair begins discussions with potential cooperation partners on forming a joint venture for a cost effective expansion of the company’s presence in the Nordic countries. The potential joint venture would accelerate Finnair’s Nordic Champion strategy, and the aim is to establish new bases and expand the company’s network in the Nordic Countries.
“The potential joint venture would expand our home base to cover the entire Nordic region”, says Mika Vehviläinen, Finnair CEO. “This requires a more cost competitive business model for our short-haul traffic, and this is what the potential partnership aims at.”
“For our customers, this would mean better connections and more opportunities to fly with Finnair”, Vehviläinen adds. “This would also support our Asian strategy through increased feeder traffic for our Asian destinations and better presence in key cities throughout the Nordic region.”
Finnair is undergoing a major restructuring program aimed at improving competitiveness and restoring profitability. In addition to strengthening its position in the Nordic countries, the company also seeks to improve the profitability of its loss-making European traffic. The joint venture model could allow Finnair to operate some or all of its European traffic at a significantly lower cost, while Finnair’s own operations would concentrate more on long haul traffic.
“We continue to discuss with our own personnel the alternatives for considerably lowering the costs of our European traffic. At the same time, we will also assess whether the joint venture could operate a part of or our entire existing European network”, says Vehviläinen.
Finnair announced on August 5, 2011 that it targeted decreases in its annual costs of 140 million euros by 2014. Finnair has already announced that it:
• has chosen Swissport as its partner for baggage and apron services
• is optimizing the size of its fleet in European air traffic, and has discontinued the leases of four Airbus 320 series aircraft and subleased four Embraer 170 aircraft
• is exploring different alternatives to improve cost-efficiency of its engine and component maintenance services
• is streamlining its support functions as well as marketing and distribution activities
• has initiated numerous other savings measures throughout the company.