Finnair (AY) has reported a third-quarter net income of €50.8 million ($65.9 million), up more than 200% from a €1.9 million profit reported in the year-ago period. The airline said these best-ever results were largely attributable to increased turnover, a high load factor, improved unit revenue, and cost cutting.
Turnover rose 7.1% to €650.3 million for the quarter, while expenses increased 3.3% to €603.5 million, producing an operating profit of €48.9 million, up 77.2% from a €27.6 million operating profit in the prior-year quarter.
Traffic rose 8.6% to 6.35 billion RPKs on a 3.4% increase in capacity to 7.81 billion ASKs, producing a load factor of 67.5%, up 3.2 points.
Yield rose 2.3% to 7.54 euro cents, as RASK increased 7.8% to 6.93 cents and CASM increased 6.1% to 6.60 cents. CASK ex-fuel was 4.43 cents, down 1.1%.
"This is the best quarterly result in Finnair's history. The improvement in the company's result is particularly positive considering that our most significant cost item, fuel, increased by some 25% year-on-year. Our more aggressive pricing and the continued optimization of our route network have resulted in improved load factors compared to 2011. The challenging market conditions have also reduced the intensity of competition on certain routes, which has benefited Finnair somewhat,” CEO Mika Vehviläinen said.
AY said a cost reduction program implemented last year, targeting €140 million savings, had “progressed well” and the airline therefore expects to make a full-year operational profit in 2012, the first since 2008. It also announced a new cost cutting program targeting sustainable annual cost savings of €60 million by the end of 2014.
“We are still far off from our long-term profitability target of 6% operating profit margin,” Vehviläinen said, pointing out that the airline is committed to fleet renewal investment worth $1.2 billion over the next few years. This investment is “vital for the implementation of the airline's Asian growth strategy,” the airline said.
Vehviläinen also warned there were significant challenges ahead. “The fourth quarter is traditionally weaker than the third and continued uncertainty in the global economy makes the visibility for the rest of the year weak, particularly with regard to the demand for corporate travel.”