Friday, 15 November 2019

Finnair Capital Markets Day: Sustainability a key driver in Finnair’s 2020-2025 strategy – new long-term target of carbon neutrality

In its Capital Markets Day today, Finnair will reveal its targets and plans for the 2020-2025 strategy period. Sustainability will be a key driver in the new strategy and Finnair will announce its detailed sustainability plan during the first quarter of 2020, addressing all three areas of sustainability – economic, social and environmental responsibility.  

At the core of Finnair’s sustainability agenda, the management and Board of Directors of Finnair are working on a long-term roadmap towards carbon neutrality. Finnair will work towards this target through a number of measures:  

A mission-critical factor in Finnair’s sustainability plan is minimising the emissions of its flight operations by: Investing in new aircraft that produce less emissions, implementing operative measures that improve fuel-efficiency, investing in the use of biofuels and in the longer term, synthetic fuels. Finnair will also work in developing electric flying for shorter distances, and the company believes that combining different transportation modes will be another important step towards a carbon-neutral future.   

Carbon offsets and emissions trading are important in addressing emissions that cannot be reduced by the abovementioned measures. Aviation is already a part of the EU Emissions Trading Scheme and 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 programmes. Finnair already offers its 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,” says Topi Manner, Finnair’s CEO. “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.”  

Between 2015 and 2019, Finnair invested approximately 2 billion euros in a more fuel-efficient long-haul fleet, and this investment has brought significant CO2 emissions reductions in Finnair’s flight operations. Finnair prepares to make decisions on replacement and growth investments that would be made predominately in its narrow-body fleet during the strategy period 2020-2025. The indicative amount of such investments is between 3.5 and 4 billion euros. This will be the most significant contributor to Finnair’s sustainability agenda, and it is estimated to reduce emissions in Finnair’s European traffic by 10-15%. It will also create a considerable number of new jobs in Finland, directly and indirectly.  

During the strategy period, Finnair targets sustainable profitable growth, with annual capacity growth between 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 it enables to Asian megacities.  

On 7 November 2019, Finnair communicated its targets for the strategy period:  

Comparable EBIT of over 7.5% over the cycle (at constant fuel and currency), after a 12-18 month build-up period 

ROCE of over 10% over the cycle (at constant fuel and currency), after a 12-18 month build-up period 

On-time-performance of over 85%

Improved Net Promoter Score and improved employee Net promoter score

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