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finnairHELSINKI: Finnish airline Finnair on Thursday posted a third quarter net profit down 94 percent from a year ago, blaming high fuel costs and uncertainty in the global economy and announced some 155 jobs cuts.

For the July-September quarter, the airline saw its net profit fall to 1.9 million euros ($2.66 million) from 32.4 million euros a year earlier.

"Despite the economic slowdown, the price of fuel has remained high, which has weakened the profitability," the company explained in a statement.

"The increasing macroeconomic uncertainty can be seen in the weaker than anticipated development of business travel pre-bookings," it added.

Nonetheless, the result was better than the deep losses it suffered in the first two quarters of the year, and the company saw sales rise 10 percent year-on-year to 607.2 million euros, as its passenger numbers grew 11 percent for the quarter.

Sales were boosted by Finnair's focus on the growing Asian market, with revenue from traffic to and from that continent growing 22.6 percent year-on-year.

"I am especially pleased that the Asian corporate sales reached almost 50 percent growth year-on-year," Finnair chief executive Mika Vehvilaeinen said in the earnings statement.

He added however that the company could not be pleased with its results, especially since it reiterated that the fourth quarter and full year results would be in the red, stressing the necessity of cost saving measures announced in August.

Finnair, which announced in August that it aimed to permanently reduce its cost structure by 140 million euros by 2014, said Thursday it had made progress towards that goal.

"The (cost-cutting) programme encompasses all functions of the company, and key areas in focus are organisation, fleet, IT, crew, maintenance, sales and distribution and airport operations costs," it said, adding that "the largest cost savings will be achieved in personnel and maintenance costs, each of these amounting to approximately 25 percent of the total savings target."

"The estimated workforce reduction need in these functions is approximately 155 positions in aggregate," it said.

Following the news, Finnair's stock price rose 2.8 percent to 2.93 euros a share in late morning trading, but underperformed the overall Helsinki stock exchange which was up 3.8 percent.

 

Copyright Reuters, 2011

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