Finnair Loses $5.4M In 4Q

Airline reported a fourth quarter loss of $7.4 million and a drop in passenger traffic as it was hit by strikes, although overall revenue grew.

HELSINKI (AP) -- Finnair PLC on Friday reported a fourth-quarter loss of $7.4 million (euro5.4 million) and a drop in passenger traffic as it was hit by strikes, although overall revenue grew.

The Finnish airline said a walkout by cabin crews at the end of last year cost it euro25 million in lost earnings and said it plans to lay off 450 workers to further increase savings.

The national carrier cautioned that it sees no near-term improvement, expecting the current quarter to be "significantly loss-making," despite a predicted 10 percent increase in sales.

Finnair's share price fell more than 2 percent to close at euro4.84 ($6.60) on the Helsinki Stock Exchange.

Revenue in October through December grew 13 percent to euro517 million from euro458 million, the airline said. Net loss in the period was euro5.4 million compared with a net loss of euro35 million in 2009.

Finnair has been struggling to cut costs amid declining demand, competition from budget airlines and overcapacity. It has laid off hundreds of workers and doubled an annual savings program to euro200 million with most cuts aimed at personnel costs.

The new layoffs would result from outsourcing some technical services, which employ 1,600 workers.

"Personnel costs account for some 80 percent of expenditure in the sector," said Kimmo Soini, head of Finnair's technical services. "Our own competitiveness has weakened as costs have grown."

Finnair said the strikes and Iceland ash cloud crisis had dented its full-year profit by euro55 million, causing a full-year net loss of euro23 million although revenue grew some 10 percent to euro2 billion in 2010.

It predicted that turnover in 2011 will grow by more than 10 percent and that "the operational result for the full year is expected to be in profit."

Last year, some 7 million passengers flew Finnair -- down 4 percent on 2009.

Finnair, which is 56 percent government-owned, flies to some 50 destinations with a fleet of 60 aircraft. It employs 7,600 people -- down 14 percent from a year earlier.

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