Improved profitability triples Finnair’s result for the year 2005

Despite expensive fuel, improved profitability tripled Finnair’s result for the year 2005. The result after financial items clearly improved and was 87.5 million euros (30.6 million), while the Finnair Group’s turnover rose 11.2% to 1,871.1 million euros.

“All in all the 2005 result was acceptable and, in terms of the second and third quarters, even excellent. The result was the best recorded for five years. The company’s profitability developed well from the beginning of the year, as years of cost-cutting and productivity improvements became increasingly evident in the last row of the income statement. The challenging market situation will continue in the first quarter of 2006, but we believe that the result for the full year will be clearly in profit,” said Finnair President and CEO Jukka Hienonen.

The number of passengers carried by Finnair Group's airlines in 2005 amounted to 8.5 million. Scheduled passenger traffic grew 10% and Asian traffic by nearly 17%. The share of Asian traffic increased to 27% of scheduled traffic revenues.

“The growth in scheduled traffic came primarily from Asian traffic and from FlyNordic’s higher passenger numbers. Asian traffic will continue to grow strongly again this year as we open new destinations and increase capacity further,” Hienonen said.

For the whole of Finnair traffic, unit revenues improved 1.8% and in scheduled traffic average ticket price increased by 0.7%. Fuel costs per tonne kilometre went up by 28.1%.

Due to higher fuel price, unit costs of flight operations rose by 2.4%. At the current price level of jet fuel, fuel costs are expected to be around 20% of turnover in 2006. In 2005 fuel costs were equivalent to almost 16% of turnover.

“We do not expect fuel prices to fall this year, so costs must be trimmed elsewhere. We have identified areas where we can achieve significant productivity improvements in the next few years. The introduction of a new more efficient fleet will in time generate big cost savings.”

In December 2005, Finnair decided to commit to the growth of its Asian traffic by acquiring 12 new Airbus wide-body aircraft. One to two new destinations will be launched in Finnair’s Asian network annually and frequencies to current destinations will also be added. The growing Embraer fleet should improve load factors in European and domestic traffic.

“The introduction of a new more efficient and environmentally positive fleet will in time generate big cost savings. In the transition stage, however, a greater emphasis than usual on staff training, among other things, will be required,” Hienonen concluded.

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