Finnair downgrades earnings forecast on weak business travel

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Published: October 10, 2011

Finnair A330-300. By Rob Finlayson

Finnair (AY) downgraded its full-year profit guidance Thursday, predicting the 2011 second half will be “slightly negative,” owing to weak business travel. It had expected to return to profitability by the end of 2011.

Even though preliminary third-quarter results look positive, estimates indicate that fourth-quarter results will be “weaker than expected,” the company said. AY predicted year-over-year revenue growth in 2011 of more than 10%.

The downgraded earnings forecast reflects “weaker than expected pre-bookings for business travel, especially in Finland, after the end of the European holiday season,” AY said. Those bookings “are unlikely to pick up significantly during the fourth quarter due to current global economic uncertainty.” In addition, AY said the profitability of Finnair cargo traffic is declining due to decreases in both prices and demand.

In September, RPKs rose 12% as overall capacity grew 14.7% compared to September 2010. Asian traffic load factors were lower, which were reflected in unit revenues. In the third quarter, revenue per ASK decreased 3.2% compared to 2010. Load factors in leisure traffic were still lower than expected, even though they improved slightly from the previous year.

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