Finnair said sustainability will be a key driver for its 2020-2025 strategy period. This includes a long-awaited decision for a new narrowbody fleet, which will be the most significant contributor to the airline’s sustainability agenda.

Finnair, which made the announcement Nov. 12 at its Capital Markets Day, will unveil a detailed sustainability plan during the 2020 first quarter, addressing economic, social and environmental responsibility. 

The oneworld carrier is working on a long-term roadmap toward carbon neutrality through a number of measures, which include investing in new aircraft to minimize emissions; implementing measures to improve fuel efficiency; and investing in biofuels and synthetic fuels in the longer term.

Finnair is also preparing to decide on replacement and growth investments, predominately in its narrowbody fleet from 2020-2025, with an investment of €3.5 billion-€4 billion ($3.9 billion-$4.4 billion).

This will be the most significant contributor to Finnair’s sustainability agenda, which calls for a reduction of emissions in European traffic by 10%-15%. One-third of the new fleet would be targeted for growth; the remaining aircraft will be used to replace older ones.

Finnair’s narrowbody fleet comprises 19 Airbus A321s, 10 A320s and eight A319s.

Between 2015 and 2019, Finnair invested €2 billion in a more fuel-efficient long-haul fleet with Airbus A350-900 XWBs, which delivered significant CO2 emission reductions.

Finnair will also work to develop electric flights for shorter distances; the company believes that combining different transportation modes will be another important step toward a carbon neutral future.   

Aviation, which is part of the EU Emissions Trading Scheme, has been the first industry in the world to agree on a global carbon offsetting and reduction scheme (CORSIA), which comes into effect in the beginning of 2021. 

Finnair is also looking into several voluntary measures, such as investments in carbon sinks and voluntary offsetting programs. Finnair already offers customers a voluntary offsetting service.  

“The path towards a long-term target of true net carbon neutrality in aviation is a long and challenging one, but we will proceed towards that goal in a determined manner, step by step,” CEO Topi Manner said.

“On this journey, we need a transparent and credible process of offsets and emissions trading, while our main focus remains on reducing the emissions from our flights. We will also engage all our partners, customers and other stakeholders in this vigorous work,” Manner added.  

During the strategy period, Finnair will target sustainable profitable growth with an annual capacity growth of 3%-5%, in line with market growth. In its strategy, Finnair will leverage the geographical location of Helsinki and the direct, short and fuel-efficient routes to Asian megacities. 

For its 2020-2025 strategy, the airline forecasts comparable earnings before interest and tax (EBIT) of more than 7.5% over the cycle, at constant fuel and currency, and a return on capital employed of over 10%, both after a 12-18-month build-up period.

Capacity, measured in ASKs, is anticipated to increase at a 3%-5% compound annual growth rate. The airline will also increase its share of owned vs. leased aircraft.

Kurt Hofmann, hofmann.aviation@netway.at