Finnair’s strategy review: Finnair to accelerate its growth


Finnair Plc                            Stock Exchange
Release                           12 May 2016 at 9:05 am EET

As a part of its annual strategy review, Finnair's Board of Directors has
defined the focus areas for 2016–2018 in order to achieve the company’s
strategic objectives. These are:

  · Profitable growth – Finnair seeks to grow slightly faster than its previous
targets and gain market share.
  · Customer experience – the Company is developing its customer service,
aligned with its vision of a Nordic customer experience.
  · People experience – Finnair is focusing on human resources development as
part of its growth and productivity strategy by developing leadership, workplace
community and occupational health initiatives, competence and cooperation.
  · Digital transformation – in developing its activities, Finnair will utilise
opportunities provided by digital innovations and best practices in business
transformation.

Opportunity in accelerated growth

Growth will support Finnair’s profitability, as unit costs will decrease with
the delivery of larger and more efficient aircraft as well as declining average
staff costs due to new recruitment. Because of its geographical advantage,
Finnair is able to expand its Asian traffic in particular more efficiently than
its competitors.

The core of Finnair’s growth strategy consists of the renewal of the widebody
fleet, for which Finnair is in the process of acquiring 19 state-of-the-art
Airbus A350-900 XWB aircraft in 2015–2023. The new aircraft will entirely
replace Finnair’s A340 fleet, which numbered seven aircraft last year, and
supplement the current A330 fleet.

According to the strategy update approved by the Board of Directors, growth can
be accelerated if market circumstances remain favourable. Finnair would expect
to deploy this additional capacity on new routes or new frequencies in its
current long-haul traffic areas, Asia and North America.

Customer experience, people experience and digital transformation to support
growth

Finnair’s vision is to offer its customers a unique Nordic experience. An
outstanding customer experience improves customer satisfaction and loyalty,
which promotes positive revenue development. Finnair is developing both its
business and economy class products, as well as its customer service, focused on
a high quality of customer service in all customer interactions.

The availability and retention of skilled personnel is key to the implementation
of Finnair’s growth strategy. Last year, Finnair announced it would recruit
approximately one thousand new employees between 2015–2020 to accommodate growth
and to replace retiring personnel. New recruitment is mostly focused on pilots
and cabin crew, while in support functions, the objective is to improve
productivity. Since the announcement, the company has already hired over 500
employees and now estimates it will recruit a further 900 in 2016–2018. At the
same time, the reduction in the average tenure of the flight crew will reduce
average wage costs, as the wage level of the new staff will be significantly
more moderate than presently. In addition, Finnair is taking new measures to
improve leadership and wellbeing at work to secure the motivation and working
capacity of its entire workforce.

The importance of digitalisation in the airline business is increasing, since
customers increasingly engage with airlines through electronic and mobile
channels. The connectivity of aircraft to information networks also provides
significant opportunities for retail trade and the sale of services in-flight.
In accordance with its previous plan, Finnair will install wi-fi throughout its
whole widebody fleet and its Airbus narrowbody fleet in 2016–2017. In addition
to commercial digital services, the company is undertaking digital development
of its entire operations to improve productivity.

In addition to the new focus areas described above, Finnair’s strategic and
financial objectives remain unchanged, and efforts concerning the focus areas
communicated a year ago for 2015–2017 continue. These current objectives and
other focus areas are described in a stock exchange release issued on 7 May
2015: http://www.finnairgroup.com/mediaen/mediaen_7.html?Id=xml_1886686.html.

Finnair Plc
Communications
Further information:
Finnair communications, tel. +358 9 818 4020, comms(a)finnair.com

Distribution:
Nasdaq Helsinki
Principal media
Finnair is a network airline specialising in passenger and cargo traffic between
Asia and Europe. Helsinki’s geographical location gives Finnair a competitive
advantage, since the fastest connections between many European destinations and
Asian megacities fly over Finland. Finnair’s vision is to offer its passengers a
unique Nordic experience, and its mission is to offer the smoothest, fastest
connections in the northern hemisphere via Helsinki and the best network to the
world from its home markets. Finnair is the only Nordic carrier with a 4-star
Skytrax ranking and a member of the oneworld alliance. In 2015, Finnair’s
revenues amounted to EUR 2,255 million and it had a personnel of 4,800 at the
year-end. Finnair Plc’s shares are quoted on Nasdaq Helsinki.