Second-quarter operating loss of €20mn from €7.5mn profit
Finnair has swung to a second-quarter core operating loss of €20 million from a profit of €7.5 million for the same period a year ago. As a result it has cut its full-year profit forecast.
The airline blamed the weaker-than-expected quarterly result on a lot of factors – delayed cost-saving measures in the face of strong union resistance, a tough market, hard competition from low-cost carriers, high fuel prices and unfavourable exchange rates. The outlook for Finnair has darkened also due to reports that Russia may ban European flights to Asia over Siberia.
“Due to delays in the personnel cost reduction negotiations and the unfavourable market conditions driving the decline in unit revenue, Finnair estimates that its 2014 operation result will show a significant loss,” the airline said in a statement.
The airline said it had achieved €176 million of annual cost savings since 2010 and would hit its target of €200 million by the end of the year. There is strong resistance from unions against a plan to cut pilots’ wages, but there has been an agreement to outsource cabin crew on some routes.
[pictured: Airbus A340-300; courtesy Finnair]