Finnair sees profit this year and plans more cost cuts
HELSINKI (Reuters) - Finnair Oyj said it was likely to turn profitable this year on an underlying basis for the first time since 2008, as its cost-cutting plans were proceeding faster than expected.
It also announced a new restructuring plan aiming to save an additional 60 million euros in costs through 2014, on top of an existing plan to cut 140 million by end-2013, to help pay for new aircraft.
The airline, facing tough competition from discount carriers, has been cutting costs and focusing on profitable long-haul flights to Asia to turn itself around.
It recently handed over operations of a third of its European routes to British low-cost airline Flybe Group Plc (FLYB.L).
The company also said on Friday its third-quarter underlying profit rose 7 percent from a year earlier to 49 million euros.
Its underlying, or operational, results exclude non-recurring items, capital gains and changes in the fair value of derivatives.
The company, whose shares rose 5 percent to 2.20 euros in early trade, said it was likely to save 90 million euros this year, 10 million more than previously planned. It said it would start talks with labour representatives but gave no details of what it would propose.
"While we achieved a profitable result in the most recent quarter, Finnair is still a long way from reaching its long-term profit target of 6 percent operating profit margin," Chief Executive Mika Vehvilainen said in a statement.
"High fuel prices, tightening competition and cost savings measures implemented by our competitors urge further measures from us."
The company said its new cost saving plan would help it pay for the five Airbus 321 ER aircraft and some Airbus 350 XWB planes it plans to buy over the next few years. Airbus is a unit of EADS EAD.PA.
It said the fleet renewal was crucial for its Asia business. (Editing by Greg Mahlich and David Holmes)