Finnair's third-quarter profit halved by currency fluctuations and tough competition

HELSINKI – Finnair PLC said Friday that its third-quarter net profit fell by 55 per cent to 23.5 million euros ($32.4 million) as currency fluctuations and tough competition continued to hamper the national carrier.

Confirmation of the profit fall from last year’s 52 million euros comes a day after the company warned that it will likely post an operational loss this year and that sales would also fall compared to 2012, mainly because of the uncertain economic climate in Europe and weaker growth in Asia.

A more detailed look at the third-quarter figures showed turnover down by more than 2 per cent to 637 million euros.

Finnair cautioned that fuel costs were expected to remain high in the last quarter and that demand for air traffic would only “grow moderately.” It gave no figures.

Struggling against tough competition from budget airlines, the Finnish airline has embarked on several cost-cutting programs, including slashing its workforce by than 1,000 employees to some 5,900 at the end of September.

CEO Pekka Vauramo described the result as “disappointing” in a quarter that is traditionally Finnair’s strongest, and added that in the “prevailing tight competitive situation” further cuts were necessary. Finnair said it had cut annual costs by 150 million euros by the end of September of a total target of 200 million euros set in 2011

“In this situation the full implementation of our structural change and cost-reduction programs is absolutely essential for securing Finnair’s future vitality and achieving profitable growth,” he said.

Finnair’s share price was up 2.5 per cent to 2.83 euros in Helsinki. But that’s only a small bounceback from Thursday’s 11 per cent fall following the warning.