FInnair is still on course for capacity growth but, like other airlines, it is feeling the effects of a tough operating environment.
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.
Subscribe to Skift Pro
Subscribe to Skift Pro to get unlimited access to stories like these ($30/month)Subscribe Now
Photo Credit: A Finnair A350 aircraft. The carrier has scaled back its capacity growth plans. FCMedia / www.flightchic.com
JetBlue-American Partnership Draws Scrutiny of U.S. Senator Over Airfares
An increase in airfares could contribute to reducing airline passenger numbers. That would be another blow for an industry still suffering from damage caused by Covid variants.
Diane Bartz and David Shepardson, Reuters | 13 hours ago
CheapOair Is Now Enrolling Flyers in AA Advantage
American Airlines gave CheapOair a vote of confidence in permitting the online travel agency to enroll AA Advantage members. Look for more online travel agencies to establish these types of deals.
Dennis Schaal, Skift | 7 days ago
Travel CEOs Cast Doubt on Business Travel’s Full Return and 9 Other Top Travel Stories
In Skift’s top stories this week, numerous travel CEOs express pessimism about a full recovery of corporate travel, a Bill Gates-owned firm becomes the majority stakeholder in Four Seasons Hotels, and Las Vegas emerges as the U.S.' most popular business travel destination.
Rashaad Jorden , Skift | 1 week ago