Finnair expects cash flow to fund US$4.5 billion fleet expansion
FINNISH flag carrier Finnair is starting its next big round of investments as much as EUR4 billion (US$4
26 December 2019 - 19:00
The investment comes on top of EUR2 billion spent over the past five years on transforming Finnair's long-haul fleet to boost fuel efficiency, and in the process cut costs and emissions.
CEO Topi Manner says the extra spending will be covered by the company's strong cash flow. Finnair is currently mostly an Airbus SE-operator and recently announced plans to expand the fleet by about one-fifth to 100 planes.
Mr Manner says Finnair will generate more cash as it increasingly relies on digital technology and automation. Fuel efficiency, he said, is high on the list of priorities. At about a fifth of total operating costs, it's the airline's biggest single expense.
'With this focus we think we can also improve both profitability and cash flow generation and thereby be able to finance our planned investments,' he said.
Finnair has about EUR1 billion in cash. It expects to generate about EUR3 billion over the six years needed to revamp its short-haul fleet.
Mr Manner, who was an executive at Nordea Bank before becoming CEO at Finnair, says he will ensure the balance sheet stays 'healthy'. That entails a closer look at borrowing costs, he said.
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