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The financial trend that produced negative figures at the end of 2001
continued into the beginning of 2002. The operational result for the Finnair
Group for the first quarter was a loss of 5.1 million euros. The company's
management, however, believes that a turn for the better has already taken
place.
"If the current development continues, we have good reason to expect a
positive operational result for this financial year," Finnair's President
and CEO, Mr Keijo Suila estimates.
Turnover was 390 million euros, 7.4 per cent lower than for a year before.
However, signs of a recovery in demand began to appear before the end of the
quarter.
"One of the toughest times for the industry is now behind us. At Finnair the
situation is well in hand, our strategy is working and we can look ahead
with confidence," Mr. Suila said.
Asian Traffic Is Strong
The general economic trend is expected to strengthen, especially at the end
of the year. The successful start-up of the company's new Asian strategy has
also strengthened prospects for European traffic.
"The gradual recovery in demand is continuing and in our main markets a turn
for the better can be seen in both business travel as well as in air cargo.
I am particularly delighted with the vigorous takeoff of our Asian
expansion," Mr Suila stated.
During 2002 the company will increase capacity in its Asian scheduled
passenger traffic by a third, in line with its new long haul strategy. It is
thanks to this new long distance strategy that passenger numbers for Asian
scheduled traffic increased by 36.0 per cent at the beginning of the year,
whilst the passenger load factor rose to 83.7 per cent.
Adjustment Improved Load Factors
The passenger load factor for North American traffic improved by 13.1
percentage points, as a result of a cutback in capacity. Passenger load
factors and volume trends were weakest in domestic and leisure traffic.
"The objective is not to increase the passenger volumes on the expense of a
healthy yield. By focusing on higher passenger load factors and implementing
the cost-cutting programme, the company expects to improve the profitability
and safeguard its financial health," said Mr Suila.
Thanks to the adjustment measures introduced last autumn, the passenger load
factor improved during January-March (inclusive) by almost four percentage
points, to 72.6 per cent. The overall capacity for scheduled traffic,
counted as passenger kilometres, will be reduced during 2002 by nearly three
per cent compared with the previous year. The biggest cuts will affect
European, North Atlantic and domestic traffic. Capacity will be reduced for
European traffic by about 11 per cent this year. Leisure traffic will be cut
back by almost 8 per cent.
Demand for business class travel still continued weak during the beginning
of the year, but advance bookings indicate, that a recovery can already be
expected. The decline in passenger numbers for business class travel on
international scheduled flights amounted to 18.7 per cent, but there was a
rise in tourist class of 7.6 per cent. The proportion of business class
travel on international scheduled flights fell by 5.4 percentage points to
23.7 per cent.
Leisure traffic capacity was reduced at the beginning of the year by 18.4
per cent compared with a year previously. This lowered turnover for leisure
traffic by almost 15 per cent. Cargo and mail volumes declined by nearly per
cent, butFinnair Cargo's turnover fell by only 1.7 per cent. A cutback of
almost 40 per cent was made in the use of freight capacity hired from
outside the Group.
Combined turnover for travel agency units owned by
Finnair rose by four per cent, and their operating profit came to more than
half a million euro.
Costs Have Remained Under Control
Operating costs came to about five per cent less than a year previously. As
a result of the lower level of operations and the cost-cutting measures, the
costs for ground handling and catering fell by more than 20 per cent. Fuel
costs were a fifth lower, the price of oil having turned downwards and with
the reduction in flying hours resulting from the adjustments. Personnel
costs increased by less than a per cent. There were almost ten and a half
thousand people employed by the company, which was about 270 fewer than at
the beginning of 2001.
Last autumn, Finnair set in motion a 115 million euro cost cutting
programme. Almost half of the savings objectives involved staff costs.
"The cost-cutting programme is proceeding as planned. It's implementation is
one of the essential requirements for producing a positive result," Mr Suila
said. |
