Uncertain outlook clouds Finnair profitability

Finnair strengthens network
Finnair Airbus A350 eXtraWideBody

Finnair is claiming revenues for April to June this year to be about the same as the second quarter of 2014 at 561 million euros ($620.1 million), but its results are still negative and it has already said the outlook for cargo is uncertain.

The airline’s operational result for this year’s second quarter was minus 12.9 million euros and its cash flow from investments totaling minus 53.7 million euros. Its operational earnings before interest, depreciation, amortization and restructuring (EBITDAR) from the second quarter was 37.4 million euros, slightly up on last year’s 35.5 million.

Finnair expects its revenue for the first half of the year to be about the same as January to June 2014, 1,101.4 million euros. Finnair chief executive officer, Pekka Vauramo, says: “Profitability improved significantly, although the operational result still showed a loss of 12.9 million euros. The result improvement is attributed to revenue growth in our core business operations, the progress of cost reduction measures and the decline in fuel prices, which is reflected in our costs gradually due to our hedging policy.”

Vauramo explains that the appreciation of the US dollar against the euro, “diluted the benefit from fallen jet fuel price and significantly increased our other dollar-denominated costs.” What has helped, he adds, is, “the appreciation of our income currencies boosted our revenues particularly in Asia”.

In May, Finnair said that the demand outlook for cargo traffic in its main markets, “still involves uncertainty”. It also expects that its unit costs, excluding fuel, will increase from the 2014 level due to structural changes in the business and the dollar’s appreciation. In October, Finnair will start flying the Airbus A350. It hopes its use of this aircraft will improve its cost competitiveness.