Finnair profit falls in third quarter
Oct. 27, 2011, Helsinki, Finland - Finnair PLC on Thursday reported a plunge in third-quarter net profit to C1.9 million ($2.6 million) despite a surge in sales as the airline was unable to meet savings targets.
Turnover in July through September grew to C607 million ($845.4 million) from C551 million ($767.4 million) a year earlier, the Finnish national carrier said. Net profit in the same period last year was C32 million ($44.6 million).
Finnair, which has been struggling with declining demand, competition from budget airlines and overcapacity in the European airline sector, said the fourth quarter would not be profitable.
CEO Mika Vehvilainen described the last period as "a positive result in the seasonally strong third quarter,'' but cautioned that Finnair would make further cuts, hinting at more layoffs, as it had
only achieved "a smallish part'' of a target to reduce annual costs by C140 million ($195 million)
"We cannot be satisfied with the third quarter results, especially because … the last quarter of the year will not be profitable,'' Vehvilainen said. "We have already begun taking measures in areas where it is possible to make savings quickly.''
Earlier this year, Finnair announced more than 600 layoffs and the transfer of dozens of other jobs as it outsourced services.
Vehvilainen said the airline would further cut costs and that changes were needed "also because of the current uncertainty in the global economy.'' He said company managers would begin discussions
"with employee representatives and analyze various alternative ways of carrying out the structural changes required to achieve these savings.''
Last year, Finnair cut hundreds of jobs and doubled an annual savings program to C200 million with most cuts aimed at personnel costs.
Finnair stock was up almost 3 per cent at C2.94 ($4.09) in early morning trading in Helsinki.
Finnair, which is 56 per cent government-owned, flies to about 50 destinations with a fleet of 65 aircraft. It employs 7,500 people — down from 7,600 a year earlier.