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Indiaexportnews.com

Finnair Group warns of further losses

  29.04.2011    

Finnair Group reported a loss of €33.8 million ($49.6 million) for the first quarter ended March 31, widened from a deficit of €21.7 million in the year-ago period. CEO Mika Vehvilainen cited the impact of events in Japan, as well as rising fuel prices and excess industry capacity for the lower results, ATW Daily News reports.
The same factors are expected to lead to a loss for the second quarter and he said that "unless there is a substantial improvement toward the end of the year in the oil price trend and the situation in Japan," AY "will be unable to achieve a positive result in 2011," although it expects to be profitable for the July-December period.
Turnover rose 10.8% to €533.7 million but this was more than offset by a 13.5% rise in expenses to €579.6 million and operating loss increased to €43.1 million from €25.9 million in 2010. Fuel expense jumped 26.1% to €132.8 million. Turnover from the airline business rose 12.2% to €452.3 million but EBIT was a negative €43.9 million, a deterioration from year-ago EBIT of negative €24.6 million.
Finnair carried 1.89 million passengers in the period, up 2.5% on a 1.7% increase in passenger traffic to 5.34 billion RPKs. Yield rose 7.6% to €0.068. However, capacity climbed 12.1% to 7.35 billion ASKs, pushing load factor down 7.4 points to 72.6%, with the result that unit revenue declined 1.3% to €0.055. Unit cost, meanwhile, declined 0.1% to €0.064, but decreased 2.5% excluding fuel, to €0.047. The average number of employees slipped 2.7% to 7,470.
Vehvilainen said the carrier is determined to continue implementing its Asia strategy. On April 27 it announced the addition of five weekly flights to Hong Kong during the summer schedule, bringing total services to 12 per week between May 30 and Oct. 9. Daily service to Singapore commences May 30. It will be the carrier's 10th scheduled destination in Asia.
"We have to work hard to turn the growth enabled by our strategy into profitability. This will require the continuous enhancement of our operations, the development of our route network and strategy and the re-evaluation of the structural solutions in the Finnair Group," he said. Operations will be enhanced, "by investing in process and automation development and by cutting overlapping activities," he stated. It is also looking to create a "cost-efficient production platform" for certain regional feeder traffic routes and examining whether it makes sense to outsource certain business activities such as catering.



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