In Good Shape for the Future
The beginning of the millennium has been an exceptional time for air transport. Powerful external changes and structural tensions in the sector came as a surprise to most airlines. Many descended into chronic difficulties, some even went bankrupt. Size proved to be no safeguard for many companies. On the contrary.
Mammoth, slow-moving icons of aviation found themselves burdened with inflexible structures, crippled by intense competition created by overcapacity. Harsh restructuring measures were initiated in many companies. Often too late, however.
In Finnair we began operational efficiency and productivity improvement measures at a stage when air transport and the economy were rising steeply. In 1999 we discontinued unprofitable routes and turned our gaze to Asia.
We purposefully began to increase our traffic to China, Thailand and Japan. We saw that China's economy was on the threshold of a boom and that the market was opening up to travel. We negotiated additional rights to open routes to new destinations. We created the Silk Road of the new millennium.
Our Asia strategy helped Finnair survive through difficult years while at the same time providing a solid platform for future growth.
During the strong fluctuations in demand of recent years, price competition promoted by overcapacity and the recent rise in fuel costs, we have nurtured our competitiveness and financial health.
Sustainable profitability and healthy growth have guided our decisions, which in the hardest years were truly difficult amidst massive cost-cutting programmes and reductions in staff. But we were able to implement even major changes in a controlled way, without endangering operational or service quality.
In 2005 we have reported a financial performance that also is on the right track from the standpoint of the targets we set in autumn 2001. Behind the clear improvement in profitability has been good growth in demand both in the Nordic area and in Asian traffic. We have been able to transfer most of the rise in fuel prices into our ticket prices.
Through persistent, goal-directed work, Finnair has secured its position in the European elite - whether performance is measured by service quality or financial health.
Airlines are part of a value chain in which they are fundamentally important. Several other links in the value chain, from aircraft construction to leasing activity and from oil companies to airports operate in an environment of limited competition, which is strongly reflected in the costs and profitability of airlines.
Despite the many external pressures, we in Finnair have tried to best of our ability to adapt to a transformed operating environment and to the new conditions that prevail in the industry. We have made independent decisions to safeguard our future and to ensure our success.
This is my final review as President and CEO. I am handing over the responsibility of managing Finnair to my successor Jukka Hienonen and I am retiring from my post. I am leaving Finnair in a good, if wistful, frame of mind. I would like to thank the shareholders for the confidence they have shown towards Finnair, even in uncertain circumstances. At the same time, I thank the company's employees for their resilience during a period of enormous change.
Keijo Suila | 
