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Finnair lowers its financial guidance for 2013

Direct News Source

13-Nov-2013 The potential strike actions of Finnish Flight Attendants' Association (SLSY) and The Finnish Aviation Union (IAU), planned to take place during the period November 15 to November 23 and during the period November 27 to November 30, would paralyze Finnair's traffic almost completely, causing significant financial losses to Finnair in the period during and surrounding the strike.

Finnair estimates that each potential strike day would decrease its turnover by approximately 4.5 million euros, thereby weakening also its result significantly. The company estimates that if the strikes are carried out to the extent threatened, they would result in direct revenue losses of at least 60 million euros and direct operating losses of at least 30 million euros. The estimate on operating losses does not include estimates on adverse impacts of the strike threat and potential strikes on Finnair's sales in the forthcoming weeks after the potential strikes. These impacts are expected to be material.

New guidance:

The weak visibility of air traffic development continues due to the uncertain economic outlook in Europe and slower growth in Asia. Fuel costs are expected to remain high in the last quarter of 2013, and the demand for air traffic is estimated to grow moderately.

Due to the preparations already made for the possible strikes of SLSY and IAU, Finnair's turnover will be below the 2012 level and its operational result for 2013 will turn to a loss. If the strikes are carried out to the extent threatened, they will result in further direct revenue losses of at least 60 million euros and decrease Finnair's operating result by at least 30 million euros. In addition, unit costs excluding fuel (CASK excl. fuel) will increase from 2012. If the strikes are avoided, unit costs excluding fuel are expected to decrease compared to 2012.

Previous guidance issued on 24 October 2013:

The weak visibility of air traffic development continues due to the uncertain economic outlook in Europe and slower growth in Asia. Fuel costs are expected to remain high in the last quarter of 2013, and the demand for air traffic is estimated to grow moderately.

Due to the continuing negative effect of the weak yen on unit revenue in Japanese sales, and the deterioration of cargo and leisure traffic revenues, Finnair expects its turnover in 2013 to be below the 2012 level. Unit costs excluding fuel (CASK excl. fuel) are expected to decrease compared to 2012. If the strong deterioration of unit revenues continues in the last quarter of the year, it is possible that Finnair will not reach a profitable operational result in 2013.

The labour agreement negotiations are still on going and Finnair hopes that an agreement is reached to avoid the strike.