Finnair's first quarter ends in the Red

Finnair’s result for January-March 2006 was four million euros in the red. Turnover rose 8.3% to 480.3 million euros, operating costs rose by 13.2%. The greatest factor was fuel expenses which grew by almost 60% and equals 30 million euros, from the previous year.

“Air transport is a growth sector, but operating conditions are increasingly difficult. Finnair’s jet fuel bill rose last year by 100 million euros and this year we will pay 120 million euros more. Increasing the price of tickets is barely an option in the current market climate in Europe,” said Finnair President and CEO Jukka Hienonen.

Between January and March, capacity in passenger traffic grew 2.3% and demand 4.2%. The passenger load factor rose by 1.3% from the previous year to 74.6%, while the amount of cargo transported increased by 3.6%.

“Finnair’s passenger numbers are growing strongly and load factors are at a record high. Despite price competition, we intend to hold on to our customers in future and focus on cleaning out our own cost structure.”

In scheduled passenger and leisure traffic, total unit revenues per passenger kilometre rose by 4.7%. Unit revenues for cargo traffic rose by 6.3% and operating costs rose during the period by 13.2%. Unit costs of flight operations rose by 10.2%. With fuel costs eliminated, unit costs rose by 3%.

At the end of last year, Finnair announced that it would commit to the growth of its Asian traffic by acquiring 12 new long-haul aircraft by 2014. Finnair’s Asian network will see the launch of one to two new destinations each year. The new destinations this year are Nagoya and Delhi and next year a route to Kuala Lumpur will be opened. At the same time, frequencies to existing destinations will increase.

The demand for Asian traffic is expected to grow by over 10% and averages prices remain at a good level. 30% of Finnair's scheduled passenger traffic earnings come from Asian traffic.

“Finnair is undergoing a transition to a new, more efficient fleet, which will burden our finances in the short term. We are on a sustainable path in our development, however, because our Asian traffic has a permanent competitive advantage, which we will continue to exploit far into the future,” Hienonen added.

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