Finnair losses mount as demand slows

2/8/2010 11:10:00 AM

The Finnair Group's turnover fell 18.5 per cent from last year to 1,838 million euros. The operational result declined to a loss of 180 million. The result before taxes was a loss of 134 million euros. Finnair's traffic contracted by nine per cent.

“2009 was a historically difficult year for the whole of air transport. For Finnair the situation was made particularly difficult by a sharp fall in demand in Finland as well as price competition, resulting from overcapacity in the sector, on many of our main routes,” says Finnair's President & CEO Mika Vehviläinen.

A rapid deterioration of passenger and cargo demand during last year
contributed to the decline in turnover. In addition, the average price of flight tickets fell last year by 12 per cent and cargo prices by 30 per cent.

Unit costs fell at the end of 2009 by seven per cent.
“The decline in price level resulted to a large extent from a reduction in business travel and a shift to cheaper price classes. In an airline, it is hard to cut costs to match falling revenues.”

Finnair's passenger numbers on scheduled and leisure flights totalled nearly 7.5 million, which is ten per cent less than a year earlier. Through capacity cuts, Finnair managed to keep passenger load factor at a good level of 76 per cent.

There has been a clearly positive trend in operational and service quality.

Punctuality rose last year from 81 per cent to 87 per cent. Customer
satisfaction rose, according to a survey conducted in January.
“Indicators show that, despite the difficulties of the latter part of the year, the punctuality of Finnair's flights as well as customer satisfaction have clearly improved, for this excellent achievements I would like to thank our personnel.”

“Positive signs are perceptible in demand, particularly in business travel and in cargo in markets outside Finland. We will continue implementing the Europe-Asia strategy with our modern fleet and excellent product,” says Vehviläinen.

Finnair has under way a 200 million profit improvement programme, of which cuts in personnel costs account for 120 million euros. Last year the programme delivered already 100 million euros in savings.
“The cost-cutting measures initiated in Finnair must be purposefully continued. To improve profitability, we must, alongside savings, strongly endeavour to increase growth in demand, create new sources of revenue and improve average prices,” concludes Vehviläinen.

Finnair Plc
Communications
5.2.2010

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