Finnair result improved in first quarter

Finnair's operating result improved during the year's first quarter and the Group's turnover rose in January-March by 3.6 per cent to 414.7 million euros. The operating profit was 0.1 million euros and the result after financial items 1.2 million euros in the red. In the air travel industry, the financial result for the first quarter of the year is generally the weakest.

The airline stated that the pick-up in demand at the start of the year was the result in part of the price reform in the autumn, strong growth in Asian traffic and the Scandinavian operations of the budget airline Nordic Airlink, acquired at the end of 2003.

"Our first quarter result is naturally not satisfactory, but it is a step in the right direction. Demand in scheduled passenger traffic grew by 26 per cent in the first quarter. Our market share is rising and passenger numbers are at an all-time record level," says President and CEO Keijo Suila.

Average ticket prices have dropped by 13.7 per cent. This has been due to a further reduction in business travel demand, the price reform implemented in September and growth in the relative share of long-haul traffic. The price level in long-haul traffic and also the level of production costs are lower than average.

Unit revenues and costs for all traffic both declined by a little over 14 per cent. Operating costs declined by one per cent. Significant decreases took place in personnel, maintenance and marketing costs.

Overall, the Group's 160 million euro cost-cutting and operational efficiency programme, initiated in spring 2003, has proceeded according to plan. Around two thirds of the cost savings are expected to be realized during 2004. The goal of the programme is to lower unit costs by at least 15 per cent during 2003-2005.

"The advance of our efficiency programme on schedule will improve our profitability despite the collapse in prices," Suila says.

The situation in the industry remains tight due to continuing overcapacity. The cyclical crisis in air transport following the external shocks of recent years is passing, but the sector's structural crisis endures.

"We have said that the situation for many companies is unsustainable and will result in bankruptcies. These we have seen once again and the depth of losses will lead more companies into dead ends," Suila predicts.