Finnair makes ninth consecutive loss-making quarter, announces cost cuts
FINNAIR on Wednesday, reported its ninth consecutive loss-making quarter, with a comparable operating result of nearly € -133 million in the first three months of 2022.
The Finnish state-owned airline said its operating environment had changed dramatically due to travel restrictions in China, Japan and South Korea, as well as the closure of Russian airspace.
However, the change is twofold, as a coronavirus pandemic that has eased its grip has led to the normalization of travel in southern Asia – India, Singapore and Thailand, as well as Europe and the United States.
“Over the past two years, Finnair has faced two major disruptions on a historical scale: the global pandemic and the Russian invasion that led to the closure of Russian airspace,” highlighted managing director Topi Manner.
“Restrictions and locks related to Omikron weakened demand, especially in January and February. As a result, the expected rise in demand came to a halt for two months and our revenue […] decreased from the previous quarter to EUR 400 million in the first quarter, ”he added. Our comparable operating result remained strongly negative at EUR -133 million, mainly due to high fuel prices and the omicron effect on costs and demand.
With the exception of China and Hong Kong, the Asian market is expected to gradually open to travel towards the end of the second quarter, according to Finnair.
The airline estimates that capacity in the second and third quarters, measured in available seat-kilometers, will be approximately 70 percent of the 2019 level. However, the airline has already taken steps to finance unused capacity and leased aircraft and crew to other airlines for the summer season, raising total capacity utilization to almost 80%.
“We have quickly found profitable use of our unused aircraft capacity by leasing aircraft with crew to other airlines. This generates revenue for us and employs a significant number of pilots, cabin crew and technical staff. Thanks to these arrangements, we are able to avoid layoffs of Finnish employees during the summer, ”Manner comments.
“We will continue to review our fleet plan and evaluate both additional leasing opportunities with crew and possible sales of unused aircraft.”
On Wednesday, Finnair also announced that it will seek additional permanent savings of EUR 60 million in distribution, aircraft lease agreements and continuous improvement in the first phase of its new savings program. The program will be supplemented as the airline finds out its long-term response to the closure of Russian airspace.
“Our cash position is strong and the EUR 400 million hybrid loan granted by the Finnish government, which is completely undrawn, supports our balance sheet,” Manner said.
Cargotec and Huhtamaki exceed, Kone, Konecranes and Nokian Tires fall short of expectations
Cargotec, Huhtamaki, Kone, Konecranes and Nokian Tires also released their first quarter reports on Wednesday.
Cargotec’s comparable operating profit improved by 26 percent despite logistics and supply chain problems related to the coronavirus and a shortage of components caused by the war launched by Russia. The Finnish manufacturer of cargo handling equipment said that it had met the challenges by continuing the price increases started last year and by intensifying active supplier cooperation and efforts to build alternative supply chains.
Finnish food packaging developer Huhtamaki exceeded market expectations by raising comparable operating profit by EUR 21 million despite continued supply chain tensions and high inflation.
The company announced earlier this month that it had begun the process of selling its operations in Russia due to the war in Ukraine. The turnover of 700 employees and four production plants in 2021 was almost 100 million euros, which is less than three percent of the total turnover.
Konecranes did not meet market expectations after its proposed merger with Cargotec was rejected by the UK Competition and Market Authority. The Finnish crane manufacturer said that it made an operating loss of EUR 50 million in the first quarter with a turnover of EUR 672 million, which fell short of expectations by EUR 70 and 110 million.
“Konecranes’ first quarter was mixed. We placed record high orders, but at the same time our profitability weakened. said Tero OttolaCEO of Konecranes.
KONE reported that its comparable quarterly operating income fell by more than EUR 50 million to EUR 195 million, largely due to the strict corona virus measures in place in China. The outlook for the second quarter is dependent on the lifting of measures and an increase leading to a rapid recovery.
Nokian Tires said the war in Russia overshadowed a stable quarter in light of earnings indicators. managing director Jukka Moisio predicted that the war and sanctions would affect the tire manufacturer’s performance, especially from the third quarter, although their ultimate impact on operations is impossible to measure. Russia accounted for 20 percent of the company’s net sales and 80 percent of tire production in 2021.
“The sanctions will significantly affect our ability to manufacture tires in Russia and thus our ability to sell tires in Russia and Central Europe,” he says. comments.
Nokian Tires reiterated that it will step up its investments in production capacity in Europe and increase the capacity of its plants in Nokia, Finland, and Dayton, USA.
Aleksi Teivainen – HT