Finnish carrier Finnair posts Q1 loss of euro19 million, warns of likely full-year loss too

Finnair posts Q1 loss of euro19 million

HELSINKI, — Finnair PLC on Tuesday posted a first-quarter net loss of euro18.6 million ($24.4 million) and warned that slumping demand will mean it will likely post a full-year deficit too.

Last year, the national carrier made a euro3 million net profit from January to March.

Like other airlines around the world, Finnair has suffered from falling passenger numbers in the global economic downturn. Net sales in the quarter fell 10 percent to euro516 million from euro573 million a year earlier.

The company said traffic was down everywhere, including in its traditional growth area Asia, and that it plans further savings by cutting capacity 10 percent in the second quarter.

Finnair said things aren’t likely to improve soon and that it would probably post a full-year loss.

“Our results from the first quarter reflect the situation of the entire airline industry regrettably well,” chief executive Jukka Hienonen said. “The potential for profitability has run into sand due to feeble demand and a collapse in price levels.”

Finnair’s share price closed down more than 4 percent at euro4.10 ($5.38) in Helsinki.

Hienonen said airlines the world over would continue to suffer.

“We reckon it will be a year of really poor performances,” Hienonen said. “Overall, there will a reduction in travel. Demand will continue to go down and that will have a dramatic effect on air traffic.”

Hienonen said Finnair was adjusting to the situation by cutting capacity and costs without “jeopardizing our Asian strategy over the longer term.”

Finnair said it will invest euro400 million this year in new aircraft, in line with plans to modernize its long-haul fleet with 12 wide-bodied Airbus aircraft to go into service in 2007-2011.

The airline said its savings program of euro100 million was on track with personnel cuts making for 50 percent of the total. Finnair has axed 600 jobs and is temporarily laying off some 6,000 employees for varying periods.

Finnair employs 9,200, down 2 percent from a year earlier.

The airline is 56 percent government-owned and flies to 50 destinations with a fleet of 67 aircraft. Last year, 8.3 million passengers flew Finnair, down 4 percent from 2007.

On the Net:

www.finnair.com