Finnair makes slight operational loss in 2001

New funding solution brings more flexibility Finnair will publish its 2001 financial statement on March 6, 2002.

According to preliminary reports, the operating result will show a slight loss, but when approximately 22 million Euro in capital gains are taken into account, the result will be slightly on the plus side. Operating costs, excluding extra depreciation of the fleet, decreased between October and December by approximately 10 %. The fleet renewal is going ahead according to plan but with new financing solutions.

"Quick adjustment measures reduced the loss already in the period between October and December. The agreed-upon savings programmes and the now confirmed additional financing flexibility give us confidence and allow us to cross the difficult times in an economically sound state," says Finnair President and CEO Keijo Suila.

The result estimate includes an extra depreciation of fleet value, which is due to the drop of aircraft market prices after September. The 115 million Euro savings plan agreed on last autumn will be implemented for the most part during 2002.

Despite the dramatic drop in demand, cash flow for Finnair Group's business was positive throughout the latter part of the year. The group had a little over 200 million Euro in liquid funds at the end of December as well as 200 million Euro worth of unused credit limits.

Demand in January continued to be weak. However, when comparing with the same time last year, it must be noted that January 2001 was still very strong and the turn for the worse began later. Finnair's production adjustment can be seen in the improved cabin factors in December-January.

"Advance bookings show signs of a slow recovery, with Asian traffic as a positive exception where bookings look positive and coincide with the strong increase in supply," says Suila.

Fleet renewal continues with new funding solution During the past few months, in addition to adjusting production, Finnair has concentrated on finding more flexible funding solutions to help realise its fleet renewal programme.

"The basic goal of our fleet renewal programme is to decrease the number of different types of aircraft at the same time as improving cost efficiency and service quality. These newly negotiated changes ensure the realisation of the renewal programme and give us the flexibility in funding that we have sought," says Suila.

Finnair has agreed on changes to the firm acquisitions of Airbus A320 family aircraft and has at the same time signed six new long-term leases for aircraft to be delivered in the next few years. Thus Finnair will have 22 Airbus A320 family aircraft in its fleet by the end of next year.

Finnair has signed an agreement with International Lease Finance Corporation from the US to lease six Airbus A320 family aircraft. The aircraft will be delivered between August 2002 and April 2004. The duration of the lease is ten years.

An agreement has been made with Airbus to cancel the delivery of one Airbus A320 aircraft and postpone the delivery of three others. According to the original plan, the aircraft were to be delivered between August 2002 and February 2003. In accordance with the new agreement, the aircraft will be delivered to Finnair between January 2004 and October 2005. As a result of these changes, the level of investment for 2002 and 2003 is expected to be less than 80 million Euro per year, which is clearly below the record levels of the past few years.