Finnair issues a profit warning due to coronavirus

Despite saying on 7 February 2020, that the direct financial impact of coronavirus during Q1 2020 would be relatively limited, Finnair today revised this and issued a profit warning.

Earlier this month the Finnish carrier, which has an extensive Asian network, said that even if cancellations to its mainland China continued until the end of Q1 2020 it forecasted that its capacity would increase by approximately 4 per cent in 2020. 

However, in a statement released today, the carrier said that due to the fast-developing situation with the coronavirus, and its wider than originally estimated impact on the global aviation market, the firm is now revising its financial outlook and operating results for Q1 2020 and that they would be lower than for the same period in 2019.

Finnair went onto say that it now expects the coronavirus situation to have a knock-on negative impact on revenue for Q2 2020 also. 

“Based on the current demand estimate, Finnair’s comparable operating result will be significantly lower in Q2 2020 than in the corresponding period of 2019. Thus, Finnair expects a significantly lower comparable operating result in 2020 than in the previous financial year.”

Finnair withdraws its capacity guidance of approximately 4 per cent growth for 2020 and will adjust its network and capacity over the next months to fit the air travel demand”

The carrier said that this reduction in capacity would lead to a decrease in costs and additionally it was looking to make further cost savings of  40 - 50 million euros via measures relating to personnel, sales and marketing activities, development initiatives and other projects. 

Finnair said this may include temporary staff layoffs as well as changes to expected recruitment plans. 

“As the coronavirus situation has entered a new phase with outbreaks in several new countries, we will take appropriate measures to adapt our costs, operations and resources to better match our revenues,” said Topi Manner, Finnair’s chief executive.

“While the spread of the coronavirus has had a limited impact on our operations so far, we now see a negative impact on demand. It is difficult to foresee how the situation will evolve during the coming months”

Manner emphasised, however, that the firm still strongly believed in its  Asia-focus strategy over the long-term and that it financial targets for the period 2020 - 2025 were unchanged.