Finnair Loses $29 Million
Finnish carrier Finnair net loss deepens
Helsinki - Finnair PLC on Wednesday reported a first quarter net loss of euro21.8 million ($29 million) as sales fell 7 percent, and warned that problems would continue.
Revenue in January to March dropped to euro481.5 million, from euro516 million a year earlier, the Finnish national carrier said. Net loss in the same period in 2009 was euro18.6 million.
The airline cautioned that before an expected turnaround later this year, its second quarter result was expected to be "clearly worse than the first quarter."
Finnair shares fell more than 3 percent to euro4.25 ($5.63) on the Helsinki Stock Exchange.
The company was badly hit by the global economic downturn but had begun to show signs of a slight recovery before the Icelandic volcanic ash cloud forced it to cancel more than 1,700 flights and 140,000 bookings, costing an estimated euro20 million.
"The year began with a slight rise in demand. In March, scheduled traffic demand rose by 20 percent from the previous year," Finnair Chief Executive Mika Vehvilainen said. "A good start to the spring was spoiled by the spread of the volcanic ash cloud over Europe."
But Vehvilainen was upbeat, saying the airline "will continue to carry increasing passenger numbers because business travel in Asia and Europe is on the rise."
Finnair said that in March turnover rose for the first time since the global economic downturn began in 2008 with a 20 percent increase in overall demand, meaning that 1.8 million people flew the airline. Asian traffic grew 10 percent.
"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," Vehvilainen said, adding that the signs are encouraging. "We expect our profitability to improve towards the end of the year."
Finnair has been struggling with declining demand, competition from budget airlines and overcapacity. It has laid off hundreds of workers and has warned of more cuts, after announcing that it had doubled an annual savings program target to euro200 million — with most of the new cuts aimed at personnel costs.
"Most of the targets of our euro200 million cost improvement program have been recognized," Vehvilainen said. "The majority of the program is being implemented, but further efforts are still required."
Finnair, which is 56 percent government-owned, flies to 50 destinations with a fleet of 63 aircraft. It employs 7,600 people — down from 9,200 a year earlier.
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