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Finnair profits to weaken due to Japan disaster, MENA conflicts

25-Mar-2011 10:32 AM

Finnair CEO Mika Vehviläinen stated (24-Mar-2011) the carrier expects first quarter profits to weaken due to the natural disaster in Japan and conflicts in the Middle East and North Africa . Mr Vehviläinen stated the Japanese disaster will affect the demand for services in upcoming weeks and months. He added that the strong rise in oil prices due to the crisis in the Middle East and North Africa will also effect the company's first quarter and annual results. The carrier also stated FY2011 results would remain in the red unless there was a substantial improvement towards the end of the year in the oil price and the situation in Japan. Finnair had previously forecast that it would make a significant loss in the first quarter but a full-year 2011 profit. Finnair, which operates 18 weekly services to three Japanese destinations, stated it has no plans to cancel services to Japan. "We have not made any decision to cancel flights, but the situation in Japan has affected our passenger numbers. This might have an affect on revenues, but it is too early to say," communications director Maria Mroue said. [more]

Finnair: "World events in recent times cannot but have an effect on Finnair. We expect that the shocking and devastating earthquake and tsunami in Japan will have a negative impact on flight demand in the coming weeks and months. It is currently impossible to assess, however, the future course of the crisis in Japan and the subsequent recovery. Over the longer term, the reconstruction of Japan may act as a stimulus for our sector. We will continue to monitor and evaluate the situation and its effects. At the moment, however, we are focusing on helping Japan by flying our scheduled nearly 20 flights per week to Japanese destinations and by delivering humanitarian aid to the disaster area. This is the best way that we can help the Japanese people at this sad time. To date we have not seen any stabilisation or decline in oil prices. It is impossible to predict how the situation will change both in Japan and the Middle East or how fuel costs will develop in future. Our current estimate, however, is that we will be unable to achieve a positive result unless there is a substantial improvement towards the end of the year in the oil price trend and in the situation in Japan. Our first quarter result, moreover, will be even weaker than previously forecast. Finnair will, of course, continue all measures aimed at restoring operational profitability and will also explore new means of achieving this goal," Mika Vehviläinen, CEO. Source: Company Statement, 24-Mar-2011.