Finnair turns to US, Middle East ahead of busy summer

By Anne Kauranen and Joanna Plucinska

LONDON/HELSINKI (Reuters) - Finnair is gearing up for a pivotal summer season as it turns to the Middle East and the United States to make up for a fall in traffic on Asian routes, the airline's CEO told Reuters.

Finnair has traditionally relied on Asian routes, benefiting from shorter flying times over Siberia, but the airline was shut out of Russian airspace after Moscow's invasion of Ukraine, having already experienced a slump in passenger numbers due to pandemic lockdowns.

Asian routes currently account for around 30% of Finnair's ticket revenue, down from 50%, Topi Manner said.

While Chinese airlines now have an unfair advantage in being able to cross Russian airspace, he said there is enough pent-up demand after China's reopening to also bolster Finnair's bookings.

"We are getting ready to increase flights to China during the summer, especially from the start of the third quarter," Manner told Reuters, adding that Beijing and Shanghai would be the major routes.

"We are focusing on these two mega cities because we don't think it is possible to make secondary Chinese cities profitable...with the uneven playing field," he said.

To offset the drop in Asian traffic, Finnair is adding routes to U.S. destinations such as Seattle and Los Angeles and cities in the Middle East via Doha, while expanding its short-haul European network.

"We see very strong demand for European short-haul traffic and when we for example look at leisure traffic to Mediterranean countries, we are already at pre-pandemic levels or even a bit above," Manner said.

RECOVERY GOES ON

Finnair has said it expects a significant increase in 2023 revenue but Manner said it would likely be mid-2024 before earnings return to pre-pandemic levels, despite already reporting two consecutive profitable quarters.

He said passengers appeared willing to pay higher ticket prices to account for a rise in jet fuel costs, and expected that to continue at least during the first half of the year.

"Visibility to the back end of the year is clearly a little bit less," he said.

Manner forecast some further disruption as the industry continues to recover from the pandemic but doubted Finnair would be hard hit, pointing to a reliable well-staffed hub in Helsinki.

(Reporting by Joanna Plucinska and Anne Kauranen; Editing by Kirsten Donovan)