Finnair Financial Performance Weak in Third Quarter 2006

In the third quarter 2006, Finnair’s turnover grew by 7.4% to 515.4 million euros. Operating profit declined 12.5% from a year earlier to 22.5 million euros.

“The third quarter result was lacklustre and reflects the entire year’s financial performance. To secure the possibility of success for our core operations we have introduced structural changes, which have their price. Due to our favourably developing gateway network and improving cost structure, I expect a clearly more positive financial performance next year,” said Finnair President and CEO Jukka Hienonen.

The decline in profitability from the previous year is a consequence of still higher fuel costs and a lower average price. The aviation fuel bill was more than 25 million euros, i.e. a third, higher than in the third quarter last year.

At the same time, the average price of tickets in scheduled passenger traffic fell by 5% and the group’s unit costs similarly declined by nearly 5%. The result of Finnair’s Swedish subsidiary FlyNordic was on black. Weaker results from Leisure Traffic and Aviation Services are also evident in Finnair’s result.

“During this year and next, personnel numbers will be cut in support functions, and some operations will be outsourced and restructured. These measures will create a foundation for improving profitability in future. The trend in unit costs indicates that we are now moving in the right direction,” Hienonen said.

Finnair’s scheduled traffic grew by 22.5% in July-September. Moreover, business class travel has picked up after many years of decline.

Asian traffic grew by nearly 40%. Some 37% of Finnair’s scheduled traffic revenue comes directly from Asian traffic, indirectly nearly half.

“The Asian market forms a unique opportunity for Finnair. Travel markets in Asia are growing over 10% annually. We want to take our share of the growth and we have every possibility to do so if we manage to develop our competitiveness as planned ” said Hienonen.

Finnair is developing more and more into an airline engaged in Europe-Asia traffic. A prerequisite for improving profitability is operating on competitive terms.

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