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UPDATE 1-Finnair secures deal to increase flights to Asia over Siberia
May 26, 2017 / 9:36 AM / in 7 months

UPDATE 1-Finnair secures deal to increase flights to Asia over Siberia

* Finland and Russia agree to increase overflights

* Overflights key to Finnair’s Asian strategy

* Ownership clause hampers M&A plans (Adds ownership discussion, background)

By Jussi Rosendahl

HELSINKI, May 26 (Reuters) - Finnair has been allowed to increase its flights from Helsinki to Asian destinations over Siberia according to a new deal between Russia and Finland, the ministry of transport and communications said on Friday.

Finnair, majority-owned by the state, depends on attracting traffic flows between Europe and Asia to its Helsinki hub because of the relatively shorter distances flown, and the new deal increases the number of scheduled flights it can make over Siberia to 80 a week, from 65 currently.

The ministry said the new rights meant Finnair can add routes to Japan, China and South Korea.

“The agreement gives a good base for negotiations of commercial deals in the future,” a Finnair spokesman said, but declined to specify plans.

Finnair has struggled in recent years with tough competition from discount carriers, but cost savings and increased flights to Asia has helped it swing back into profit with the company paying its first dividend in April in four years.

However, Finnair has repeatedly called on the government to open the door to mergers and acquisitions.

It has urged the state, which owns 55.8 percent of Finnair, to scrap a clause that obliges it to hold a majority stake in the company.

The government considered the issue last year but it is not planning any changes to the clause at the moment.

Eighteen months ago media reports suggested British Airways owner IAG was negotiating to buy into Finnair, a member of its Oneworld airlines marketing alliance, but both sides denied there had been any talks. ($1 = 0.8759 euros) (Editing by Greg Mahlich)

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