Finnair flying high on big profits, Asian market skying

Targeting Asia has paid off for Finnair as the company reported higher fourth-quarter, pre-tax profits, and said it would continue to focus on its Asia destinations this year. Fourth quarter pretax profit was 35.2 million Euro, compared to a 26.3 million Euro loss reported for the corresponding business period in 2006. Turnover increased 13.9 percent to 568 million Euro in the quarter, the carrier said.
For full-year 2007, turnover increased 9.6 percent to 2.18 billion Euro, while pre-tax profit was 138.9 million Euro. For 2006 the group reported a 14.7 million Euro loss. Chief Executive Jukka Hienonen said in a statement that oil prices hit “a record high” at USD 100 a barrel, but “the Euro-Dollar exchange rate lightened fuel costs.” In its outlook, Finnair said it would continue to focus on traffic between Asia and Europe. Fuel costs account for about a fifth of the group’s total costs. Finnair said that the slowdown in the global economy would not impact traffic between Europe and Asia as much as other routes.
Asia traffic grew some 37 percent in fourth-quarter, Finnair said. During the fullyear the group flew some 8.6 million passengers, including 1.1 million passengers on charter flights. The group currently has some 9,480 employees.
Finnair also said it had decided to buy one additional Airbus A330 widebody aircraft to join its long-haul fleet in the spring of 2010. The order means Finnair has two remaining options for Airbus widebody aircraft after placing the biggest order in its history to replace and expand its fleet of seven McDonnell-Douglas MD-11 aircraft.
“The orderbooks of the aircraft manufacturers are full, so fulfilling the option makes sense,” said in the statement Henrik Arle, head of Finnair’s scheduled passenger traffic. The twin-engine A330’s fuel consumption is more than a fifth less than that of the triengine MD-11.
Besides its reported profits, Finnair said non-recurring capital gains totaled 30 million Euros, including the sale of the FlyNordic subsidiary. Profit before taxes was 140 million Euro. Hienonen added, “Our hard work last year delivered a good result that we are proud of. During 2006 we laid a solid foundation for the improvement of profitability and the price for this was evident in the result. We entered 2007 in good shape and profitability improved in every quarter. We need strong cash flow for future acquisitions.”
The company said it would invest a total of nearly 700 million Euro in new long-haul aircraft this year and next as its new marketing scheme took off. Last year, Finnair carried nearly nine million passengers. Passenger traffic overall grew by 13 per cent. Asian traffic grew by over 30 percent. Passenger load factor overall was 76 percent, on Asian flights slightly higher.
Hienonen added: “We filled our aircraft with passengers and cargo. Load factors were at record highs, even though we increased capacity considerably. We worked really hard in the domestic market as well as in Europe and Asia.”
Operating costs rose by nearly four percent. Unit costs of flight operations fell by more than five per cent, as a result of the implemented 80 million Euro efficiency programme and the growth in Asian traffic. Fuel costs rose last year by 14 per cent. Asian traffic growth will continue this year, when two new Airbus A340 long-haul aircraft join Finnair’s fleet. A new destination, Seoul in South Korea, will open in June.
“We will focus in future on ensuring that our fleet operates better in our new, more demanding operating model. The complexity of Europe-Asia traffic is more challenging than managing local traffic. We will seek to maintain our place among the Europe’s most punctual network carriers,” Hienonen said.