Manner, 44, currently works as the head of personal banking at the Nordic region's biggest bank and he will succeed departing Finnair boss Pekka Vauramo. Vauramo is widely credited with returning the airline to profit growth on the back of cost cuts and a focus on passengers flying between Europe and Asia.

"Topi Manner has extensive experience in both private and corporate customer business, and he has played a strong role in the digital transformation and customer service development of his bank," Finnair Chairman Jouko Karvinen told a news conference.

Manner has worked for more than 20 years at the bank in different positions.

Vauramo, Finnair CEO since 2013, is joining engineering company Metso in November.

Share in 55.8 percent state-owned Finnair were down 0.65 percent in a weak market.

The airline suffered a setback in July when it warned that a substantial increase in fuel prices would weigh on profits in the second half of the year.

Inderes analyst Antti Viljakainen told Reuters he did not anticipate major changes to Finnair's strategy under the new management.

"Chairman... highlighted (Manner's) experience in people-centric leadership. It is of the utmost importance at Finnair, to be able to balance between the personnel groups and the owners," said Viljakainen, who has an "accumulate" rating on the stock.

STRAINED TIES

Manner takes the helm of an airline that has struggled for several years to compete with discount carriers and had difficulties in restructuring its operations due to strong trade unions. Also, relations with the state have been strained.

A board member for management compensation quit earlier this year after the government criticized a supplementary pension arrangement for Vauramo. In 2012, the government replaced six of its board members due to lack of openness in compensation decisions.

In the past years, some former and current government officials have looked into scrapping a clause that obliges the state to own more than 50 percent of Finnair, saying the change would pave the way for Finnair to take part in industry consolidation.

However, the idea has proved too sensitive for politicians.

Chairman Karvinen, asked on the ownership, told Reuters that the company was focused on developing its business "under the current situation".

"For sure, we think about all kinds of strategic options. I have a peaceful mind... and we will always discuss these matters directly with the owners," he said.

(Reporting by Anne Kauranen and Jussi Rosendahl; Editing by Keith Weir and Emelia Sithole-Matarise)

By Anne Kauranen and Jussi Rosendahl