Finnair issues profit warning as coronavirus impact spreads

The airline needs to save up to €50 million in lost profits due to the coronavirus epidemic and it could mean temporary redundancies for Finnair staff.

0
179
File photo of Finnair plane / Credit; News Now Finland

Finnair has issued a profit warning for 2020, revising its earnings estimate for the year downwards because of the impact of coronavirus as it tries to find €50 million savings.

“As the coronavirus situation has entered a new phase with outbreaks in several new countries, we will take appropriate measures to adapt our costs, operations and resources to better match our revenues” says CEO Topi Manner.

In February the company initially said they thought the first quarter impact of coronavirus “would be relatively limited” even if mainland China flight cancellations continued until the end of March.

However, the airline said on Friday that “due to the fast-developing situation with the coronavirus and its wider than originally estimated impact on the global aviation market, Finnair is now revising its financial outlook.”

The company estimates that the continued spread of the Covid-19 coronavirus epidemic will hurt their second quarter earnings as well and now expects them to be “significantly lower” than the year before.

Finnair has already canceled flights to mainland China until the end of March, and cut its daily Hong Kong services by 50%, but is also looking into making other costs savings of up to €50 million.

This could include temporary lay-offs, cuts to sales and marketing activities and other development projects.

“While the spread of the coronavirus has had a limited impact on our operations so far, we now see a negative impact on demand. It is difficult to foresee how the situation will evolve during the coming months” explains Manner.

“At the same time, we strongly believe in our Asia-focus and strategy of sustainable, profitable growth. We are determined to continue on this long-term path despite these temporary adjustments” he adds.

You might also be interested in: