(Updates with CEO comment in third paragraph, analyst comment in fifth.)
Oct. 27 (Bloomberg) -- Finnair Oyj, Finland’s biggest airline, reported third-quarter profit that missed estimates as passenger travel slowed down.
Net income plunged 94 percent to 1.9 million euros ($2.7 million) from 32.4 million euros a year ago, the Vantaa-based airline said today in a statement. The average estimate in a Bloomberg survey of seven analysts was for a profit of 9.3 million euros. Sales rose 10 percent to 607 million euros.
“The uncertainty in the economic environment is causing issues for us and airlines generally,” Chief Executive Officer Mika Vehvilainen said today in an interview. “Business travel after the summer holiday has not developed as favorably as last year. There’s also a softening of demand and price pressure in the air-cargo market.”
Finnair, which hasn’t posted an annual profit since 2007, said this month it expects its second-half results to be “slightly negative” as bookings for business travel have suffered. It maintained that forecast today. In May the company said it would cut 400 jobs as it withdraws from unprofitable third-party repair work.
“Business travelers are running away from business class,” said Jaakko Tyrvainen, an analyst at Fim Bank Ltd. with a “hold” rating on Finnair shares. “I’m worried about the outlook on the yield environment.” Yield is revenue per passenger kilometer.
Finnair is also reviewing whether to cut more costs by reducing its short-haul traffic fleet as passengers aren’t filling the planes, Vehvilainen said. “We’re not happy with our utilization rate, especially in our narrow-body fleet,” the CEO said, declining to elaborate on how many planes it may cut.
The carrier is also talking to unions about “productivity improvements” to lower pilot and flight-attendant costs, he said.
The shares rose as much as 4.2 percent, and traded at 2.97 euros, up 3.9 percent to 2.95 euros at 11:50 a.m. in Helsinki, matching a 3.8 percent increase for the benchmark OMX Helsinki 25 index.
--Editors: Jerrold Colten, Thomas Mulier
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