Finnair 2Q profit plunges in weak market

HELSINKI, FINLAND: Finnair PLC saw second-quarter profit plunge by half because of high fuel costs in a tough market, and the airline cautioned it could swing into a loss.

Net profit in the three-month period to the end of June was down 46 percent at euro13.9 million (US$21.5 million), from euro25.8 million a year earlier, the Finnish national carrier said Friday. Revenue grew slightly to euro546 million (US$845 million), from euro538 million.

Finnair's stock plunged more than 7 percent to euro5.29 (US$7.97) in late afternoon Helsinki trading.
Chief Executive Jukka Hienonen said airlines were suffering the ``unsettling developments'' of high fuel costs and lower ticket prices.

``Air transport profitability has weakened strongly during the spring. The sector is undergoing a market failure caused by an overcapacity in relation to demand,'' Hienonen said. ``Finnair has been unable to insulate itself ... (and) the latter part of the year appears difficult and the operational result for the last six months may dip into the red.''

The airline confirmed plans to cut some 500 jobs, and said it will continue with measures to improve performance by euro50 million (US$75 million). It did not give a timetable for the plan, first announced in June.

Passenger traffic was flat during the period compared to the same three months last month, but picked up slightly in July to 715,700 passengers _ an increase of 1.2 percent on July 2007, Finnair said.

Founded in 1923, Finnair is one of the world's oldest airlines and flies to 60 destinations with a fleet of 63 aircraft, employing 9,500 people. The Finnish government is the largest owner with a 56-percent share of the company.