National carrier Finnair denies speculation over a potential takeover by British Airways or IAG. The British-Spanish holding company owns British Airways, Iberia, Spanish low-cost airline Vueling and earlier this year bought a majority stake in Irish flag carrier Aer Lingus from Ryanair.
Finnair said in a statement on Thursday that it "is not active, and is not aware of its shareholders being active, in any such negotiations." An IAG representative also dismissed the report to the Finnish web-only financial publication Taloussanomat, saying: "We are not in any discussions with them."
Finnair and BA have long been close codeshare partners and IAG co-owned the former Flybe Nordic airline.
Shares soar on KL report
On Thursday morning the main Finnish business daily Kauppalehti published a story headlined "British Airways wants to buy Finnair". It says that a representative of IAG confirmed that negotiations between the two airlines are far advanced and that news of the deal’s progress and ownership arrangements could be on the cards soon.
Shares in Finnair rose by as much as 12 percent in Helsinki on the report, before paring gains to trade up 3.4 percent in late afternoon.
"Focusing on making ourselves attractive"
Kauppalehti also cites a detailed late-October report by the US aviation news site Skift headlined "British Airways’ Parent Wants Another Airline and Finnair Is the Best Target".
It quoted Finnair CCO Juha Järvinen as saying at the CAPA World Aviation Summit in Helsinki in October: "We need to become focused on building our platform, so that our platform through Helsinki, especially to North Eastern Asia, is competitive. It is a niche where survive by ourselves or we become part of a consolidation.... We are focusing on making [ourselves] attractive. There’s no reason to hide that fact."
According to Skift, Finnair’s greatest value to IAG would be its access to Russian skies, which could potentially be shared with other partners within the group.
Access to Russian airspace
It quotes Järvinen as saying: "Our whole strategy is based on Russia over-fly rights. That is something that we need to be very careful about. It’s part of the discussion, if there needs to be a consolidation, we can find a way to work with that. Of course, we have other airlines in Europe who have managed to structure the company, also as consortiums, so that fellows in Central Europe still have Russian over-fly rights. There’s a way to do it, of course. It’s something we must consider, but that’s our biggest asset going-forward."
That story was published in late October, just before Finnair posted its best quarterly result ever, following sharp cost-cutting measures.
As the state owns nearly 56 percent of Finnair, any sale of its shares would have to be approved by the minister in charge of state ownership steering – who, unusually, in this cabinet happens to be Prime Minister Juha Sipilä.
Established in 1923, Finnair is one of Europe's last small national airlines.
Corrected at 10:27 to clarify that BA's parent IAG co-owned Flybe.
