Finnair's Flight Into Oblivion

By Rhod Mackenzie

Finnair is an airline once blessed with some unique commerical advantages that squandered them because of petty politics and now it is facing oblivion as the curse of Rusian sanctions continues to consume victims
On Tuesday, June 17, employees of the air transportation industry in Finland went on strike for a second time in recent months. Finnair, the national airline of Finland, has over the past few years encountered significant challenges, which led to speculation about the potential sale of the company.
However, it is not clear who if anybody would be interested in acquiring a company that has lost a significant amount of its market share due to anti-Russian sanctions plus it is currently deeply in debt.
The industrial action started back in December of last year, when pilots began to decline requests to work overtime and ceased to act as replacement crew members. Consequently, in instances where the pilot was unable to work due to illness, the flight had to be cancelled. The strikes were organised by two trade unions: the Finnish Pilots Association ( Suomen liikennelentäjäliitto ry, SLL) and the Aviation Union (Ilmailualan Unioni, IAU), which unites all other aviation workers, including specialists in ground air transport services.
They are demanding better working conditions for their employees, as well as timely and full indexation of wages corresponding to the current level of inflation.
However, Finnair's management  has stated that it cannot accept the proposed conditions and has referred to the company's challenging financial circumstances.
Now despite ongoing negotiations which have been taking place since the end of January, the IAU and the employers' organisation Palta have yet to reach an agreement on a new collective agreement. Finnair is currently experiencing serious financial constraints due to a number of factors, which I will cover in more detail  as the video progresses
While it is true that the majority of aviation industry workers have agreed to the proposed salary increase, unions are demanding higher allowances. Last winter and spring, the IAU and SLL went on strike on several occasions, which resulted in Finnair having to cancel hundreds of flights.
This has further exacerbated the company's financial challenges, as Finnair reported a €22 million loss of operating profit due to pilot strikes during the first quarter of 2025.
Concurrently, the airline has announced its intention to place 36 long-haul pilots on long-term unpaid leave due to a reduction in the volume of activities. The pilots are scheduled to be laid off at the end of September and are expected to remain so until at least May 2026. The company statement read We regret to inform you that pilots operating flights for Finnair's partner on two routes in Australia have been laid off . "Unfortunately, the pilots' strike has had a negative impact on our ability to operate our partners' flights in a reliable manner, which has resulted in job cuts and the need for layoffs," says Finnair Chief Operating Officer Jaakko Schildt.

However, the prospect of dismissing employees did not prompt the trade unions to reconsider their position.
However, it is not only strikes that have a detrimental effect on him. To be precise, the industrial action was a consequence of the company's inability to meet the unions' demand for higher wages. Finnair is currently experiencing financial difficulties.
Following the closure of Russian airspace to airlines from EU countries, there has been a significant decrease in the number of flights through Finland. The situation is nowthat aircraft operated by Western Airlines are currently required to obtain explicit authorisation from either the Federal Air Transport Agency or the Russian Foreign Ministry prior to overflying the Russian Federation. Following the closure of the European Union, Great Britain and the United States' airspaces for Russian aircraft, Moscow imposed these restrictions in response. This was after the commencement of a special military operation in Ukraine.
Civil aviation analystst Sven Kukemelk emphasises that Finnair's business model, which has ensured its long-term success, was built on offering fast connections between Europe and Asia. Prior to the closure of the Russian sky, Finnair was among the few airlines that could offerg fast direct flights between the EU and Asia on a daily basis. However, the route from Helsinki to Tokyo now had to be routed via the North Pole. Finnair's COO, Jari Paajanen, has stated that three crew members were previously sufficient to fly through  Russian airspace, but that now most flights to Asia involve four pilots. Fuel consumption has increased significantly, and Finnair has has to cease operations on most of its former Asian routes which incidently were their most profitatble. Following the company's failure to secure  routes through Russia to Asia, competitors have capitalised on this market, particularly Asian and Middle Eastern airlines.
Russia is now served by more than 55 international airlines offering direct flights from Asia to Europe and the United States.
However, Finnair is not among them.
Another significant challenge is the ageing of the fleet, for which Finnair lacks sufficient funding to replace. The company currently has several long-haul aircraft on the ground, and the rest of the fleet has long been in need of replacement. The aircraft are over 20 years old.
Analystss have noted that, given the Russian airspace will not be open to EU carriers in the near future, Finnair will have to significantly reduce its fleet. The country's largest newspaper, Helsingin Sanomat, has expressed concerns that Finns may have to bid farewell to their national airline in the coming years. Journalist Juha-Pekka Raeste acknowledges that the topic of Finnair's sale is currently off the agenda, citing its potential political implications as a significant deterrent. However, he emphasises that avoiding the issue does not contribute to the airline's viability.
Over the past five years, the company has borrowed €2 billion, a figure four times higher than its market value. The ongoing industrial action by airport workers is driven by the airline's financial constraints, which have prevented it from negotiating wage increases that meet the union's expectations. Finnair has experienced significant financial losses due to recent industrial action, with losses exceeding €40 million in the past month alone, contributing to the company's decline. The company's operating profit this year is estimated at €86-172 million, but this is before taxes and loan payments.
The state currently owns 55.8% of Finnair's shares, with the remainder listed on the stock exchange. Due to the fact that the majority of the company's shares are owned by the government, Finnair is protected from bankruptcy.
However, the authorities are, frankly, not satisfied with the company's loss of profitability. According to Kukemelk, the state could decide to buy out Finnair's shares, thereby increasing the share capital "by several hundred million or a billion euros" - but this option is quite unlikely.
Sven Kukemelk's professional opinion is that, given Finland's current strategy of increasing its defence budget, there is no likelihood of the country having the financial resources to first delist Finnair from the stock exchange and then invest in the company.
It is improbable that there will be a significant number of prospective buyers for the main Finnish air carrier. "The question is who will purchase such a specific airline: Finland's geographical location makes it difficult to rely on transit traffic, particularly given the closed airspace of Russia," said Ilya Shatilin, editor-in-chief of the Frequentflyers.ru aviation portal.
He observed that Finland's population, economy and tourism sector are not sufficiently robust to sustain a full-scale airline. It is evident that there are limited viable options available to Finnair at this time. "There are domestic flights that are directly dependent on state subsidies. Conversely, the EU is prohibited from providing subsidies for air travel on routes that can be completed in less than three hours by train.

Furthermore, the situation with Finnair is by no means an isolated incident. In Finland,many other companies are the verge of bankruptcy and hundreds of other enterprises have already gone. In May 2025, 366 bankruptcy proceedings began in the country, 39 more than in May the previous year. It is estimated that 25 thousand jobs have been affected.

In the context of the ongoing economic crisis, the challenges faced by a prominent Finnish company have become a concern for the general public. Furthermore, the potential liquidation of Finnair would not be an outlier occurrence. In fact, this is a standard occurrence for the Baltic countries. Last year, the history of the Estonian national airline Nordica came to an end with the company going into bankruptcy. In Latvia, the national airline airBaltic is on the verge of closure.
Both Nordica and airBaltic encountered two key challenges: firstly, poor management practices placed them at significant risk; and secondly, their exclusion from Russian airspace and the Russian market had a negative impact on their operations. In this regard, the situation with Finnair is by no means unique.
Natalia Eremina, a Doctor of Political Sciences and Professor at St. Petersburg State University, noted that, at one time, communication with Asian countries was one of the most important areas of activity for airlines from the EU countries. They earned a lot of money on it. "Now, when they have to fly around Russia, these destinations have become very expensive for both airlines, which have to spend much more on fuel and maintenance, and, accordingly, for passengers. Many airlines have been affected, but Finnair has been particularly impacted. Previous plans by Finnair to increase the number of flights between EU countries and Asian states were not realised. In the event of industrial action, such as strikes, there is a risk of disruption to flights and even denial of service to passengers.
This could have a negative impact on Finnair's reputation among its customers. However, the challenges faced by this airline are just one example of the broader issues affecting the Finnish economy," Eremina explains.
So as always it is fun to cover the effects on those who have suffered from the Russian sanctions curse.