Finnair to Tighten British Airways-Japan Airlines Tie-Up

Finnair Oyj said it will seek to join a British Airways and Japan Airline Co. business arrangement to coordinate schedules and share revenue on flights to Japan as the carrier expands ties with Oneworld alliance members.

Combining fares will be a main element of the partnership, Allister Paterson, senior vice president for commercial operations at Helsinki-based Finnair, said in a phone interview. Regulatory approval from Japan could come this quarter, with the business ties operational by the end of the year, he said.

Finnair struck a similar agreement in March to join a trans-Atlantic venture between British Airways and the U.K. carrier’s Spanish sister unit Iberia, as well as with American Airlines that effectively lets the carriers operate flights as a single business. Asian routes are even more central to Finnair’s network, which has long tried to provide a bridge from Europe using its location to serve transfer traffic.

“Japan is one of Finnair’s core markets and we look forward to the benefits this strategic joint business agreement will bring to our customers and other stakeholders,” Chief Executive Officer Pekka Vauramo said in a joint statement with British Airways and Japan Airlines.

Finnair rose as much as 2.6 percent to 2.77 euros and was trading up 1.9 percent at 1:33 p.m. in Helsinki. The stock has gained 16 percent this year.

10 Routes

The Finnish carrier, British Airways and JAL currently operate a combined 10 routes between Europe and Japan, with JAL providing the most services linking its Tokyo based to London, Paris, Frankfurt and, as of today, Helsinki. The U.K. and Japanese companies agreed to the initial ties in October.

“Because we don’t do a lot of overlapping flying with these airlines, the joint venture will add revenue more than cut cost,” Paterson said.

The joint venture agreement with London-based British Airways, Iberia and American will become active tomorrow, Finnair said in a separate statement. British Airways and Madrid-based Iberia are units of International Consolidated Airlines Group SA, while American is owned by Fort Worth, Texas-based AMR Corp.

“The trans-Atlantic joint business has been a big win for European consumers flying to America and vice versa, and now Finland will benefit too,” Vauramo said.

Finnair would consider additional deals, although none are currently planned, Paterson said.

“Whenever we can tie our fortunes into bigger carriers that make our product more meaningful, that is always of interest to us,” he said.

Before it's here, it's on the Bloomberg Terminal.