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Finnair Reports Weak Third Quarter 2008 Results

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Finnair's operation result for the third quarter 2008 was 2.8 million euros, compared with 40 million euros a year earlier. Turnover rose 2.7% while traffic grew by 7.6%

“What is usually the best quarter of the year fell far short of expectations. The main factors were a historically high fuel price and an average ticket price weakened by the economic downturn,” said Finnair’s President & CEO Jukka Heinonen.

Finnair's traffic demand has continued to grow, but more modestly than in the early part of the year., and while load factors have been higher than the previous year, price levels have fallen.

“Demand is actually quite good, but instead of business passengers aircraft are increasingly carrying leisure passengers, who pay less for their tickets,” said Hienonen.

Finnair Scheduled Passenger Traffic's average revenue per passenger kilometre fell in the third quarter by around 4%. The benefit arising from the recent fall in fuel prices has been significantly diluted by a weakening of the average price of tickets and a strengthening of the US dollar.

Operating expenses rose by 15% between July-September compared with the previous year. Unit costs of flight operations per tonne kilometre rose by nearly 5% and fuel costs rose between July-September by 36%. Fuel is the company’s largest single cost item.

“Conditions for profitable business are increasingly marginal. In this situation, we have sought cost savings by rationalising operations and cutting capacity, which will also impact on personnel costs,” Hienonen said.

In 2009, Finnair will modernise its long-haul fleet. Next year, five new Airbus A330 wide-bodied aircraft will be acquired by the company replacing current Boeing MD-11 aircraft.

“This year and next, great challenges lie ahead for the profit development of the airline industry and we in Finnair are not immune to this situation. We will, however, implement our planned investments in new aircraft and find in our organisation the efficiencies we need to ensure that we are in good shape when economic conditions recover,” Hienonen added.

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