First Free Story (1 of 3)Join Skift Pro
Finnair Oyj scaled back plans to add flights this year and said revenue increases will be slower than capacity growth as the airline industry grapples with waning demand. The shares fell the most in almost three years.
The Finnish airline will increase capacity by 7 percent this year instead of a planned 8 percent, with the slowdown also prompted by Airbus Group SE’s delivery delays of A350 planes, the carrier said in a statement. Finnair said separately that it’s also planning a cost-reduction project targeting 20 million euros ($22.5 million) in annual savings by the end of June 2017.
In contrast to European competitors including Deutsche Lufthansa AG, Finnair has until now been more optimistic about increasing traffic, and outlining plans in May for capacity growth of up to 10 percent annually through 2018. Travelers from the U.S. and Asia have been deterred from visiting Europe following terrorist attacks, and Lufthansa said earlier this month that economic uncertainty is also hurting demand.
Finnair fell as much as 10 percent, the steepest intraday drop since October 2013, and was down 8.6 percent at 4.81 euros as of 10:25 a.m. in Helsinki. The stock has dropped 11 percent this year.
Airbus said in June that it will struggle to meet a goal of handing over 50 of the widebody A350 this year, and plans to review the target by late summer once it’s clear whether suppliers of the model’s interior fittings have overcome delays.
©2016 Bloomberg L.P.
This article was written by Andrea Rothman from Bloomberg and was legally licensed through the NewsCred publisher network.