These three things will determine Finnair’s fate after industrial action
If Finnair survives industrial action on dry feet, it has every chance to improve its performance. This is what Evlin Finnair says is Joonas Ilvonen.
Finnair, a state airline, has been in an unbearably difficult situation in recent months.
The company has had to cancel flights, customers have become painful, and there is no agreement to find a collective dispute.
However, the Finnair game is not lost, even though it is on its route black clouds.
1. Airline ticket prices are about to stabilize
If well, demand will increase from the present and will increase ticket prices. Ticket prices have fallen by 4.6 percent in the first quarter of the year and it is expected that the decline will be folded.
Although the trade war causes a threat to the economy, Ilvonen considers it possible that it does not press demand.
– The trade war may not negatively influence the travel demand, says Ilvonen.
He goes on to say that high travel demand can remain above despite the trade war and demand can increase faster than supply.
At the same time, Ilvonen recalls that last year Finnair’s passenger rates were still relatively low, especially in Europe and could still afford it.
2. Passenger capacity grows-North America pulls
About 40 percent of Finnair’s flight kilometers go to Europe, 30 Asia and over 10 percent to North America.
Of these, a moderately good growth rate has been provided by North America traffic, which the company has still announced its investment, says Ilvonen.
-In particular, that Northern Atlantic traffic has pulled well last year. Last year, ticket prices in European traffic were declining after a high rise, but in North Atlantic traffic, prices remained on a low rise.
According to Ilvonen, North Atlantic traffic was a light spot on global air traffic.
– It was pulled by the fact that the Americans traveled to Europe and vice versa, says Ilvonen
At the beginning of the year, Finnair said before Trump’s import duty announcements that it intends to increase North Atlantic capacity this year as well.
During the announcement of the earnings last week, Finnair said that it had not noticed a significant decline in sales volumes in North Atlantic flights.
According to Evlin Ilvonen, the company’s announcement is credible.
3. Fuel is still cheaper
With the general decline in fuel fuel fears, air fuel costs have also fallen over the last couple of months.
There have been about fifteen percent of the decline. According to Ilvonen, Finnair’s annual fuel bill is approximately 900 million.
– If you simply drop minus 15 percent, it will become a hard sum. Of course, Finnair has fuel protection, so the invoice will not immediately appear in the fuel prices paid by Finnair, Ilvonen says
What about industrial action?
Despite the light spots, industrial action causes Finnair for high losses. According to the company, in the early part of the year alone, industrial action reduced the company’s comparable operating income of EUR 21 million, and the effects of the battle will also be reflected in the coming months.
The longer it takes to find a settlement, the greater the effects of the company.
However, industrial action will never continue indefinitely.
Another threat is the trade war launched by Trump. This is a risk, as the decline in the general economic situation can reduce the willingness to fly. However, at least these risks are not visible in Finnair’s operations, even though the company is serious about them.