Finnair Annual Report 2013

ANNUAL REPORT 2013 20 3 FINNAIR ANNUAL REPORT 2013 STRATEGY / CUSTOMERS / OPERATIONS / EMPLOYEES / SOCIETY / FINANCE / GOVERNANCE / GRI 2 CONTENTS About this report 2 CEO’s review 3 STRATEGY 5 Strategy 6 Megatrends 9 About this report Key Performance Indicators 11 The triple bottom line 12 The Finnair Group’s main field of business is the provision of air transport and travel services. CUSTOMERS 14 The purpose of the Annual Report – encompassing objectives of what were previously published as 19 separate Financial and Sustainability Reports – is to measure and account for the financial, economic, Social indicators social and environmental performance of this enterprise, and to identify and explain the strategic OPERATIONS 21 business ramifications of this performance. Shareholders, investors, analysts, media, customers, Environmental indicators 28 employees, other interested stakeholders and the general public at large comprise the report’s EMPLOYEES 38 intended audience. Social indicators 43 Finnair sees sustainability as a critical and strategic aspect of business performance, thus the Annual SOCIETY 51 Report embeds material sustainability disclosures in its annual reporting framework. The scope of the Stakeholder Engagement 55 report is defined according to the Finnair Group’s material activities in 2013 across all its units. For Social indicators 56 more information on how materiality is determined, see the materiality and stakeholder matrix on FINANCE pages 12–13. 58 The Report of the Board of Directors59 Finnair has a strong presence in social media, and we wanted to try a new form of engagement Financial statements 78 and image gathering. In this annual report we have crowdsourced images through Finnish mobile Financial indicators 123 application Scoopshot. We asked the world’s air travelers to show us what they find magical about GOVERNANCE 125 air travel, what’s the best part of the journey, and what delights them. The task was valid for two 125 weeks, starting from December 10, 2013. The annual report includes also images from our employ- Management principles ees, the cabin attendant Noora Kunttu and the pilot Tomi Tervo. They both have Instagram accounts: Corporate Governance Statement 2013 131 finnairnoora and finnairtomi. Risk management and major risks 142 Remuneration Statement 2013 147 Board of Directors 156 Executive Board 157 Reporting principles 158 GRI matrix 160 Information for shareholders 167 Glossary 168 Contact information 169 FINNAIR ANNUAL REPORT 2013 STRATEGY / CUSTOMERS / OPERATIONS / EMPLOYEES / SOCIETY / FINANCE / GOVERNANCE / GRI 3 CEO’s review 2013 – A year of improving competitiveness airlines. These have put Finnair on the right and reducing costs path toward improved operational quality and Like many recent years, 2013 was eventful for Finnair. For me, it was cost-efficiency. my first year at Finnair. Since the beginning of June, I have learned a great deal about the airline business and Finnair, and the significance The customer is at the heart of what we do. of both to Finland. My meetings with our personnel, customers, Recognising this, we began a strategic devel- business partners, shareholders and other stakeholders have made it opment effort in 2013 aimed at improving our clear that Finnair holds a very special position in the hearts of Finns. service in order to respond to customer needs even better than before, thereby increasing There are strong links between the success of the company’s Asian sales. More information on the results of these strategy and Finnish air connections, which in turn play a signifi- efforts will become available in 2014. cant role in the lives of Finns and the Finnish business sector. Finnair offers connections from Finland to some 60 destinations in Europe Financially, 2013 did not live up to our expec- and 13 destinations in Asia. The strong connections it provides tations. Our turnover fell by two per cent from promote the international success of Finnish industry, while also 2012, totalling 2.4 billion euros. The main factor facilitating investment in Finland by foreign industry. slowing down turnover growth was the fall in The link between the company’s success and Finnish GDP is euro-denominated revenue due to the substan- obvious. Helsinki Airport – our home – is Finland’s second-largest tial depreciation of the Japanese yen, but in the hub of jobs. By being successful, we can create new jobs at Finnair second half of the year the weaker-than-ex- and indirectly create new jobs in other areas of the airline business pected development of cargo and leisure traffic cluster. also contributed to the decrease in turnover for the full year. Our operating profit was -4.8 million euros. This is unsat- Finnair has a very strong brand that we must continue to develop, isfactory, as our target was to record a profit for the year. Our result grow and protect, even as the company undergoes what is perhaps was also affected by tight competition and the continued high price of the largest transformation in its history – a transformation that is fuel. In the fourth quarter, our result was also negatively affected by also painful in certain ways. Our goal is to make Finnair a company measures taken to look after our customers in preparation for labour that combines the best of its 90-year history with the courage to action. Cancelled flights resulted in additional expenses. These costs adapt and learn, allowing it to continue operating as a strong player led to our operating result showing a loss for the full year. in its industry through this period of consolidation. In recent years, the company has concluded many strategic partnerships in the Nevertheless, our goal is to make Finnair a sustainably profitable and area of aviation services, and entered joint businesses with other growing company. Profitable growth is our most important objec- FINNAIR ANNUAL REPORT 2013 STRATEGY / CUSTOMERS / OPERATIONS / EMPLOYEES / SOCIETY / FINANCE / GOVERNANCE / GRI 4 tive. However, we will not be able to grow – or be profitable – unless remain confident that we can work together through the ongoing we improve our cost structure and competitiveness. negotiations to achieve the best possible outcome for the future of Finnair and its personnel. The year 2013 was encouraging in this respect: we achieved the targeted permanent annual cost reduction of 140 million euros set in Finnair is currently preparing for two significant waves of invest- August 2011 ahead of schedule. Cost reductions have been system- ment: In 2015, we will take delivery of the first of our new Airbus atically sought in several different categories, including fleet, avia- 350 long-haul aircraft, and in the coming two years we must also tion service, catering, sales, distribution and personnel costs. Our make decisions on the renewal of our European fleet to ensure progress in the first cost-reduction program shows that, by exam- future competitiveness and energy efficiency. These investments ining things with an open mind, operations can be optimised, are essential for our future, and Finnair must be a strong player in its competitiveness can be improved and the necessary cost reductions industry in order to finance the required capital expenditure. We are can be achieved. convinced that this is possible if we do the right things, at the right time, and in the right way, with courage and an open mind. We have In the collective labour agreements concluded with cabin crew, decided that we will be winners in our industry. pilots and the Finnish Aviation Union IAU, it was agreed that negotiations on cost reductions be postponed until the first half of 2014. I would like to extend my warmest thanks to all Finnair personnel The sought cost reductions primarily involve personnel-related costs for the year 2013 and their contribution to achieving our shared in all personnel groups. Our previously set cost reduction targets goals. I also wish to thank our customers, business partners and remain unchanged. shareholders for their trust in the company. Many of our structures associated with wages and working hours Pekka Vauramo originate from the era of closed markets. Renegotiating these structures to match current labour market practices is challenging, but we are determined to move forward with Finnair’s structural changes and cost reductions in cooperation with personnel and their representatives. I hope we will reach company-specific agreements on the cost reductions necessary for Finnair and its personnel well ahead of the deadline set for the negotiations. However, at the same time, we must assess other options to prepare for the contin- gency that, despite our best efforts, the necessary agreements on cost reductions are not reached through negotiations. I nevertheless FINNAIR ANNUAL REPORT 2013 STRATEGY / CUSTOMERS / OPERATIONS / EMPLOYEES / SOCIETY / FINANCE / GOVERNANCE / GRI 5 Strategy FINNAIRFINNAIR IN THE IN WORLDTHE MEGATRENDS Digit alisatio n and WORLD nisation con a Urb nect ivity nd l a ica sia m A STRATEGIC FOCUS AREAS no to co er Su e ow st in p ai ft al Cu na hi ic ness stome bi S lit titive r ex lit o mpe peri y p t co enc Cos e In te rn at th io w n ro al g w le in b n ta in ﬁ g o r te P a m years The process of operating and developing Finnair's network in the VISION most ecient way by combining proﬁtable growth, market developments Finnair's customer promise DESIGNED FOR YOU OPERATIONS EXCELLENCE and customer satisfaction To double revenue from Asian trac by 2020 from the 2010 level, to be the most desired option in trac between Asia and Europe, and to be the number one airline in the Nordic countries. FINNAIR ANNUAL REPORT 2013 STRATEGY / CUSTOMERS / OPERATIONS / EMPLOYEES / SOCIETY / FINANCE / GOVERNANCE / GRI 6 STRATEGY Finnair is pursuing business and leisure travellers as well as cargo customers in the fast growing Asian economies, Finland and The core of Finnair’s strategy is taking advantage of the growing particularly those European cities that do not provide direct connec- demand for traffic between Europe and Asia.

Load more