Finnair has reported a 2.2% decline in revenue during the three months to September 30, 2014 to €622.7 million. The operational result was €26.7 million. Net cash flow from operating activities stood at €-8.9 million, and cash flow from investments totalled €-15.1 million. Unit cost per available seat kilometre excluding fuel (CASK excl. fuel) decreased by 0.4% from the previous year’s level, while unit revenue per available seat kilometre (RASK) fell by 1.6%.
For the nine months to September 30, 2014, revenue declined by 5.9% year-on-year to €1,731.8 million. The operational result was €-27.1 million. Net cash flow from operating activities stood at €39.8 million, and cash flow from investments totalled €126.3 million. Unit cost per available seat kilometre excluding fuel (CASK excl. fuel) decreased by 1.0% from the previous year’s level, while unit revenue per available seat kilometre (RASK) fell by 3.7%.
Guidance remains unchanged: Finnair estimates its turnover in 2014 to be significantly lower than in 2013 and its 2014 operating result to show a significant loss.
“Finnair’s passenger and cargo revenue for July–September declined year-on-year, causing our turnover to decrease to €622.7 million,” said CEO Pekka Vauramo. “The decline in unit revenue, caused primarily by the strengthening of the euro against key Asian currencies, continued in the third quarter, although at a slower rate than earlier in the year. Growth in passenger volume and the progress of cost reduction measures were not sufficient to compensate for the weak revenue development, as our operational result fell to €26.7 million. In order for Finnair’s profitability to improve, it is essential that we increase unit revenues and maintain tight control over costs. By the end of September, we had nearly achieved the overall target for our 200-million-euro cost reduction program. The program will be completed by the end of the year. The savings agreements we concluded with pilots and cabin crew in September and October will contribute to our cost competitiveness from 2015 onwards. I am very pleased with the outcome of the negotiations, as they not only produce cost savings, but also enable us to continue to develop our operations together with our personnel.”
Vauramo pointed out that Finnair announced a number of product upgrades in August to help it pursue additional revenue. The airline will take delivery of its first A350 aircraft in late 2015, which is says will impact profitability from 2016 onwards. Before that, he states, any significant improvement in revenue “would require a substantial recovery in domestic market demand and a substantial decrease in the world market price of fuel”.
Finnair estimates its turnover in 2014 to be significantly lower than in 2013. Fuel costs are expected to remain high. 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 operational result will show a significant loss.