Finnair's second quarter clearly loss-making

Finnair's second quarter clearly loss-making Finnair's turnover fell in the second quarter by 21.6 per cent to 427.4 million euros. The operational result was a loss of 56.9 million euros. The result before taxes was a loss of 32.5 million euros.                                 
“Our sector is facing its deepest crisis. Finnair, too, has suffered from the collapse of average prices caused by the decline in air travel. Turnover has  been undermined by reduced demand and weaker price levels,” says Finnair's President & CEO Jukka Hienonen.
Finnair's traffic declined in the second quarter by 8.5 per cent and capacity was cut by 11.7 per cent, which improved the load factor of aircraft by 2.5 percentage units to 72 per cent. The amount of cargo carried fell by 24.0 per cent. In January-June, Finnair carried a total of 3.7 million passengers, of  which scheduled passenger traffic accounted for 3.1 million. The arrival punctuality of Finnair's scheduled flights was 90 per cent. The improvement on the previous year was around 12 percentage points. Finnair's punctuality is one of the best among European airlines.
In scheduled traffic, the average price per passenger kilometre fell by 18 per cent. Unit revenues per tonne kilometre for cargo traffic declined by 33.1 per cent. Operating costs fell in the second quarter by 13 per cent. Unit costs of flight operations rose by 2.8 per cent.                                        

“In recent years we have energetically pursued efficiency targets in order to  adjust our operating costs correspondingly to lower revenues. In an airline the proportion of total costs accounted for by fixed costs is generally high. In connection with the substantial decline in turnover, however, we have seen that many inflexibilities also hinder the adjustment of variable costs.”
Finnair has under way an efficiency programme totalling 200 million euros, of which a savings target of 120 million euros is directed at personnel costs.    

Within the framework of cost-cutting programmes, the number of employees has already been reduced by 600, and new statutory employer-employee ‘YT' negotiations will be initiated during August-September.                        

“We have diligently conducted a dialogue with all seven personnel organisations during recent years, but only in Finnair Technical Services have we reached a stabilisation agreement to improve profitability. Based on this agreement, we can accept additional work. Otherwise we would have had to resort to redundancies and temporary lay-offs in Finnair Technical Services, too.”

Finnair is planning a structural reform, the aim of which is to centralise the Group's scheduled traffic and leisure operations into an integrated organisation and also to achieve closer cooperation between operations and Group Administration. In this way, overlaps in support operations can be removed. A further objective is to establish separate companies for Finnair Technical Services and flight training activities.

“Through the organisational change we will seek enhanced efficiency in our structures. Particularly by combining scheduled passenger and leisure traffic we will centralise our most important resources, fleet and personnel. We will also assess which functions we can outsource.” 

(Source: Transport Weekly)