(Updates with airline’s comments on delivery plan in sixth paragraph, range comparison in seventh, analyst comment ninth.)
Aug. 13 (Bloomberg) -- Finnair Oyj said A350 planes due to join its fleet in 2015 have the potential to fly around Siberia to reach Asia should Russia implement plans to close airspace in response to European sanctions imposed over the Ukraine crisis.
Airbus Group NV’s newest long-haul jet appears to have the range required to detour and still reach destinations in Japan and China around which Finnair has built its business model, Chief Executive Officer Pekka Vauramo said today.
Finnair, the first European A350 customer, will begin taking the planes next fall. Comparisons with Airbus A330 and A340 models that currently operate its long-haul routes suggest the twin-engine jet will have the capability for diversions, though Vauramo said “there are very few facts” available to indicate whether Russia will go ahead with airspace closures.
“The additional freight capacity of this plane translates to me that it does have the range, technically it’s possible,” the CEO said in a briefing in Vantaa, near Helsinki, while adding: “I don’t want to speculate about Russia. We all know too little about that one.”
Shares of Finnair were trading 2 percent higher as of 1:16 p.m. in Helsinki. The stock fell as much as 8.5 percent on Aug. 5, when news of Russia’s airspace deliberations first emerged.
Finnair will get the first four of 11 A350s on order in 2015, serving cities including Shanghai and Beijing, routes that could be impacted by a closing of Siberia’s skies. The new model will also be used for flights to Bangkok, followed by Hong Kong and Singapore in 2016 when the carrier will receive four jets. The final three A350s will be delivered in 2017, spokeswoman Paeivyt Tallqvist said, and Finnair has options for eight more.
The wide-body plane would bring operational flexibility beyond that of Finnair’s existing long-haul fleet, said Jarkko Konttinen, vice president for marketing, with the A330 lacking the range for significant detours on Asian routes and the A340 probably able to divert only on flights to certain locations.
The A350 has a range of 7,750 nautical miles, 350 more than Finnair’s A340-300s, according to Airbus specifications, and 1,650 nm beyond the limits of the A330-300, which carries two- fifths less fuel. The new model also has a freight capacity 13 percent higher than the A340 measured by containers carried, which could help eke out extra range if the plane flew light.
Finnair’s comments suggest the hurdles facing carriers should Russia shut off eastern airspace that was opened up with the end of the Cold War and collapse of the Soviet Union “would not be insurmountable,” said Sandy Morris an aerospace analyst at Jefferies International Ltd. in London.
“The fact that the A350 could probably do the fly-around is obviously an advantage,” Morris said. “It’s been a bit of a boon to airlines having that Russian airspace open up.”
Even before the Ukraine crisis the A350’s introduction was critical to Finnair’s growth plans, CEO Vauramo said, with the model “one of the main drivers” in a push to improve margins over the next three years and to double revenue from Asian services by 2020 compared with 2010’s level.
The A350s will feature 46 flat-bed berths in business class and 208 coach seats, plus a new “economy comfort” section of 43 seats with four inches more leg room, for a total of 297. Finnair is making its first foray into premium-economy seats, with a one-way ticket costing 45 euros ($60) more than in coach.
More to Lose
With a long-haul strategy built around services connecting Europe with northeast Asia via the shortest routes over Russia, Finnair has more to lose than other carriers should Moscow elect to curb operations over Siberia.
Flights from Europe to Japan, northern China and South Korea would be hit hardest, according to flight-tracking website Flightradar24. Finnair has 115 weekly services across an area of Siberia 1,700 miles across -- a bigger proportion of its network than at Air France-KLM Group and Deutsche Lufthansa AG, the only airlines with more services spanning the region.
Finland’s transport ministry said yesterday that it’s conducting studies into the likely impact of an airspace shutdown as Russia threatens to widen its retaliation against the European Union in a tit-for-tat sanctions row.
Russia is weighing the prohibition of overflights to the Asia-Pacific, with measures “on the table” though “not necessarily immediate,” Prime Minister Dmitry Medvedev said Aug. 7 in the country’s most recent comments on the matter.
President Vladimir Putin’s government is considering steps directed at airlines after EU sanctions imposed over the escalating conflict involving pro-Russia rebels in eastern Ukraine led to the grounding of Moscow-based airline Dobrolet, the recently formed low-cost unit of OAO Aeroflot.
--With assistance from Andrea Rothman in Toulouse.