Building A New Silk Road Capacity Planning and Selecting Markets - - PowerPoint PPT Presentation

▶
building a new silk road
SMART_READER_LITE
LIVE PREVIEW

Building A New Silk Road Capacity Planning and Selecting Markets - - PowerPoint PPT Presentation

Aug 31, 2022 154 likes •327 views

Building A New Silk Road Capacity Planning and Selecting Markets Greg Kaldahl SVP Resource Managem ent 1 Finnair Capital Market Day, 3 Dec 2012 The Airline I ndustry I s I n A State Of Constant Change Market cap (bn) as of 1 Jan 1999

slide-1
SLIDE 1

Finnair Capital Market Day, 3 Dec 2012 1

Building A New Silk Road

– Capacity Planning and Selecting Markets

Greg Kaldahl SVP Resource Managem ent

slide-2
SLIDE 2

The Airline I ndustry I s I n A State Of Constant Change

2.9 4.0 4.2 4.3 4.8 4.9 6.1 6.4 6.4 Market cap (€bn) as of 1 Jan 1999 6.5 8 6 4 2 1.5 1.7 1.8 1.8 1.9 7.0 9.3 2.1 2.5 2.7 10

Note: AMR is parent company of American Airlines, Sairgroup of swissair Sources: Capital IQ, Bloomberg, Datastream, Analyst Reports, ECB

1.5

NA/ EU Rest of world

Finnair Capital Market Day, 3 Dec 2012 26

slide-3
SLIDE 3

0.7 3.9 3.7 4.7 4.2 4.0 6.3 1.0 Market cap (€bn) as of 1 Jan 2005 6 8 10 3.6 0.7 9.4 4.0 1.3 4 2 1.5 0.7 Bankruptcy process Bankruptcy process Acquired by LH Acquired by DL Merged with AF

Sources: Capital IQ, Bloomberg, Datastream, Analyst Reports, ECB

The Airline I ndustry I s I n A State Of Constant Change

NA/ EU Rest of world

Finnair Capital Market Day, 3 Dec 2012 27

slide-4
SLIDE 4

1.1 Market cap (€bn) as of 1 Jan 2012 6 4 2 10 8 Acquired by LH Acquired by DL Merged with DL Merged with AF Merged with UA Bankruptcy process BA merged with IB Bankruptcy process Merged with CO 5.1 4.2 5.1 0.6 7.1 5.4 5.2 1.2 2.6

Sources: Capital IQ, Bloomberg, Datastream, Analyst Reports, ECB

The Airline I ndustry I s I n A State Of Constant Change

NA/ EU Rest of world

Finnair Capital Market Day, 3 Dec 2012 28

slide-5
SLIDE 5

Market cap (€bn) as of 1 Jan 2012 10 6 4 2 8 7.1 5.4 5.2 5.1 5.1 4.2 2.6

9.1 6.3 5.3 5.2 4.6 3.3 2.5 2.2 2.1

Note: Market value of Emirates estimated, LAN/ TAM shown as combined entity Sources: Capital IQ, Bloomberg, Datastream, Analyst Reports, ECB

4.8 New in top 20 2.0 2.0

8.4

NA/ EU Rest of world

The Airline I ndustry I s I n A State Of Constant Change

Finnair Capital Market Day, 3 Dec 2012 29

slide-6
SLIDE 6

Finnair I s Changing As W ell I n Order To Succeed

  • Narrow body fleet optimization

– Nine aircraft removed from service – Renegotiated leases with multiple Airbus lessors – Total savings in excess of 10M€

  • I mproved route planning and aircraft utilization

– New network forecasting and fleet planning tools – Narrowbody utilization up almost two hours and over 9 hrs/day

  • Partnerships for improved cost efficiency and flexibility

– FlyBe Finland provides lower cost base for turboprops and small jets

  • 20 airplanes now under contract

– Fewer excess aircraft = more lease in opportunities

Finnair Capital Market Day, 3 Dec 2012 6

slide-7
SLIDE 7

Finnair Capital Market Day, 3 Dec 2012 7

SHORT HAUL Nordic Cham pion LONG HAUL Top-3 in Europe – Asia

Customer Oriented – Agile – Right Partners

W hat I s I m portant – Finnair’s 2 Fold Strategy

  • Global Network Offering
  • Economies of Scale
  • Large Home Market
  • Strong Relationships with Travel Agents
  • Brand
  • Loyalty Programs
  • Competitive Seat Costs
  • Competitive Fares
  • Flexible Cost Structure
  • Rapid Market Entry & Exit
  • High Aircraft Utilization
  • Point-to-Point Operation
  • Ancillary Revenue
  • Internet Distribution

Profitable Finnair

slide-8
SLIDE 8

To: BJS

  • vs. LH
  • vs. EK
  • vs. SK

From: GOT

  • 23%
  • 52%
  • 5%

CPH

  • 18%
  • 48%

0% HAM

  • 11%
  • 43%

0% BRU

  • 5%
  • 38%

0% BCN + 1%

  • 23%

0% Nordics Above alps South Europe

GOT CPH HAM BCN

North Asia South Asia

Distance advantage to LH and EK Neutral: No significant distance advantage

BRU

Distance disadvantage

BJS

Geography Provides A Competitive Advantage

Finnair Capital Market Day, 3 Dec 2012 8

slide-9
SLIDE 9

To: TYO

  • vs. LH
  • vs. EK
  • vs. SK

From: GOT

  • 21%
  • 50%
  • 4%

CPH

  • 17%
  • 46%

0% HAM

  • 11%
  • 43%

0% BRU

  • 5%
  • 38%

0% BCN 0%

  • 25%

0% Nordics Above alps South Europe

TYO GOT CPH HAM BCN

North Asia South Asia

Distance advantage to LH and EK Neutral: No significant distance advantage

BRU

Distance disadvantage

Geography Provides A Competitive Advantage

Finnair Capital Market Day, 3 Dec 2012 9

slide-10
SLIDE 10

To: HKG

  • vs. LH
  • vs. EK
  • vs. SK

From: GOT

  • 17%
  • 26%
  • 3%

CPH

  • 13%
  • 23%

+ 1% HAM

  • 7%
  • 20%

+ 1% BRU

  • 2%
  • 17%

+ 1% BCN + 3%

  • 6%

0% Nordics Above alps South Europe

HKG GOT CPH HAM BCN

North Asia South Asia

Distance advantage to LH and EK Neutral: No significant distance advantage

BRU

Distance disadvantage

Geography Provides A Competitive Advantage

Finnair Capital Market Day, 3 Dec 2012 10

slide-11
SLIDE 11

11

2012 Destinations: 13 Frequencies: 90

Osaka 7 New York 7 Tokyo 10 Nagoya 7 Seoul 7 Beijing 7 Hong Kong 9 Chongqing 4 Bangkok 7 Delhi 6 Toronto 5 Singapore 7 Shanghai 7

W e Have Successfully Exploited Our Geographic Advantage

Finnair Capital Market Day, 3 Dec 2012

slide-12
SLIDE 12

Long Haul Netw orks Depend On Exponential Effects

A H B G C F E D A B C E D

Results

Four aircraft Four markets One market per aircraft

Results

Four aircraft Ten markets 2.5 markets per aircraft

12 Finnair Capital Market Day, 3 Dec 2012

slide-13
SLIDE 13

Key Elements Of Market Selection – Let’s Examine Singapore

Finnair Capital Market Day, 3 Dec 2012 13

  • 30 new city pairs
  • High beyond demand
  • Biggest Scandinavia to Asia

route unserved by Finnair

  • Highly competitive
  • Growing market
  • High share of business travel

1 2 3 Traffic Flows Competitive Capacity Fare Levels

  • Long haul drives lower unit costs

4 Trip Cost; Unit Cost

slide-14
SLIDE 14

Key Elements Of Market Selection – Let’s Examine Singapore

Finnair Capital Market Day, 3 Dec 2012 14

1 2 3 Traffic Flows Competitive Capacity Fare Levels 4 Trip Cost; Unit Cost

Sufficient demand Competitive product Attractive fare levels Reasonable costs

slide-15
SLIDE 15

Leads To Overperformance vs. Plan

Finnair Capital Market Day, 3 Dec 2012 15

‐2000000 ‐1000000 1000000 2000000 3000000 4000000 Jun 2011 Jul 2011 Aug 2011 Sep 2011 Oct 2011 Nov 2011 Dec 2011 Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 Jan 2013 Feb 2013 Mar 2013 Apr 2013 May 2013 Jun 2013 Jul 2013 Aug 2013 Sep 2013 Oct 2013 Nov 2013 Dec 2013

SIN Performance vs Original Forecast

Original forecast Actual performance

slide-16
SLIDE 16

Summary

  • Finnair is a strong network carrier
  • Capturing our share of traffic between Europe and Asia is critical

to Finnair’s success

  • We are also striving for increased presence in the Nordics
  • Our goal is to continue to profitably increase utilization and

ruthlessly decrease costs → leading to improved profitability

Finnair Capital Market Day, 3 Dec 2012 16