Finnair's loss halved in first quarter


In January-March, the Finnair Group's operational result was a loss of 26
million euros, compared with a loss of 48 million euros a year earlier.
Turnover fell by seven per cent to 481 million euros. Operating expenses
declined by ten per cent. The result before taxes was a loss of 29 million
euros. 
 “Unit revenue declined further, but the trend turned during the quarter. In
March, turnover in the Airline Business segment rose for the first time since
the beginning of the economic downturn,” says Finnair's President & CEO Mika
Vehviläinen. 
 “There have already been clear signs of growth in markets outside Finland,
particularly in Asian traffic. Compared with its competitors, Finnair has
increased its market share in traffic between Asia and Europe.” 

In January-March, passenger traffic overall declined by nearly six per cent,
which was mainly due to a reduction in leisure flights. Asian traffic grew by
ten per cent. A total of 1.8 million passengers were carried on Finnair
flights. The passenger load factor for traffic overall improved from the
previous year by five percentage points to 80 per cent. 
 “In terms of scheduled traffic, the year began with a slight rise in demand.
In March, scheduled traffic demand rose by 20 per cent from the previous year.
Cargo demand is also rising strongly. The amount of cargo carried grew from the
previous year by nearly a quarter.” 

All of the significant cost items decreased due to reduced traffic as well as
implemented efficiency measures. Fuel costs declined by 20 per cent. The market
price of fuel is rising, but Finnair's price hedging dampens price
fluctuations. Unit costs for flight operations fell by just over ten per cent. 
 “Work to improve our productivity will continue. Unit costs excluding fuel
costs fell in the early part of the year at the same rate as unit revenues.
Most of the targets of our 200 million euro cost improvement programme have
been recognised and are being implemented. Personnel have also participated in
joint measures to achieve flexibilities,” says Vehviläinen. 

In mid-April, most of European air traffic was grounded by an ash cloud
discharged by a volcano in Iceland. Over a week or so, Finnair had to cancel
more than 1,700 flights and more than 140,000 bookings. 
 “A good start to the spring was spoiled by the spread of the volcanic ash
cloud over Europe. Estimates of the losses already incurred by Finnair are 20
million euros, but recovery of demand will still take weeks. I believe,
however, following the dispersal of the ash cloud, that we will continue to
carry increasing passenger numbers, because business travel in Asia and Europe
is on the rise.” 

As a result of direct revenue losses and extra costs caused by the volcanic ash
cloud as well as a temporary fall in the passenger load factor, the result for
the second quarter is expected to be clearly worse than the first quarter. 
 “We have just come through a major crisis. It is difficult to assess how
quickly we can return to the growth track. The signs perceived before the air
traffic stoppage are encouraging, however. We expect our profitability to
improve towards the end of the year.” 

Finnair Plc
Communications
28.4.2010