Finnair Q1 net loss grows to $50 million

AP News
Posted: Apr 28, 2011 11:55 AM
Finnair Q1 net loss grows to $50 million

Finnair PLC on Thursday reported a first-quarter net loss of euro33.8 million ($49.6 million) as the airline was hit by high fuel costs and the Japanese earthquake disaster.

The Finnish carrier said the figure in the January to March quarter grew from a net loss of euro21 million a year earlier. Revenue increased 11 percent to euro534 million, from euro482 million in the same period in 2010.

The airline said it expects the second-quarter result to be negative as will the rest of the year "unless there is a substantial improvement toward the end of the year in the oil price trend and in the situation in Japan."

Finnair stock fell more than 2 percent to euro3.60 ($5.33) on the Helsinki Stock Exchange.

"Our cost burden increased sharply due to a substantial and rapid rise in oil prices," CEO Mika Vehvilainen said. "In the current demand situation, we have not been able to transfer the fuel price increase as such into flight ticket prices despite the positive yield development."

He said the Japan disaster in March had a negative impact on the first-quarter result as travel fell dramatically to that country.

"Finnair has, however, continued daily flights to Japan, which we believe will benefit us in the long term," Vehvilainen added.

The airline saw strong growth in traffic, particularly on Asian and North American long-haul flights, and said it expects revenue growth of some 10 percent in 2011, compared with last year.

But it warned of continuing overcapacity in the industry, especially in the European airline sector.

Finnair has been struggling to cut costs with declining demand and competition from budget airlines. It has laid off hundreds of workers, most recently in March when it announced 450 layoffs in technical services and the transfer of dozens of others as it outsources services to further cut costs.

It has also been plagued by several strikes, including by cabin crews, that cost it more than euro25 million in lost earnings.

Finnair, which is 56 percent government-owned, flies to about 50 destinations with a fleet of 65 aircraft. It employs 7,600 people _ down 14 percent from a year ago.