Friday, October 7th, 2011
Finnair Oyj, Finland?s biggest airline, forecast a second-half loss as the economic slowdown starts to impact demand for travel.
The last six months of 2011 will likely be ?slightly negative? on softer fourth-quarter ticket sales, the Vantaa- based airline said in a statement today. Finnair had previously targeted a profit for the period.
?Prebookings for business travel, especially in Finland, have been weaker than expected after the end of the European holiday season,? Finnair said in the statement. ?Those bookings are unlikely to pick up significantly during the fourth quarter due to current global economic uncertainty.?
The Finnish airline hasn?t posted an annual profit since 2007 and reported another loss in the first half. Finnair and other European network carriers are taking a hit as demand drops and competition increases from discount airlines such as Ryanair Holdings Plc, EasyJet Plc and Norwegian Air Shuttle ASA.
?Finnair?s cost base is too high, including the fuel costs that are still at a high level,? said Bengt Dahlstrom, a Swedbank analyst in Stockholm who recommends buying the shares. ?Finnair is doing well in its Asia traffic but it?s suffering in Europe, where the competition is very fierce.?
Finnair dropped as much as 31 cents, or 11 percent, to 2.63 euros, the biggest decline since Aug. 5, and was down 2 percent as of 11:19 a.m. in Helsinki trading. The shares have plunged 43 percent this year, valuing the carrier at 369 million euros ($496 million.)
Forecast Cut
Deutsche Lufthansa AG last month cut its full-year profit forecast and said it would deepen capacity cuts this winter after August?s results were weaker than expected. SAS Group, the Nordic region?s biggest airline, said Sept. 27 that workers musts accept pay deals that are lower than the rate of inflation if it?s to meet cost-cutting targets as a slowdown in traffic weighs on ticket prices.
Finnair is proceeding with a plan to reach 140 million euros of cost savings by 2014, it said Aug. 29. The airline in February announced plans to cut 450 jobs as it withdraws from unprofitable third-party repair work. Finnair will continue to ?turn over every stone? to cut costs, it said today.
Read More..
By Ola Kinnander
Source: businessweek
Related posts:
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- Finnair to slash 155 more jobs as it cuts costs
- Air Canada posts narrower Q1 operating loss, sees stronger first half
- AirAsia quarterly net falls 23%
- Oil costs push Turkish Airlines to Q1 net loss
Short URL: http://www.airlineberg.com/?p=5863
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