Finnair’s 70% earnings driven by air cargo in second-quarter

Finnair Group’s revenue in the first half of 2020 (January-June 30) was mainly driven by cargo-only operations, as Covid-19 pandemic grounded Finnair’s passenger operations to a near halt. The group stated that its cash position and equity were restored to pre-pandemic level.

Finnair, in its second-quarter, recorded a massive drop in revenue, which was down by 91.3 percent compared to the same period last year. The total drop in the group’s revenue in the first half of the year stooped down by 56.8 percent compared to the same period last year.

“The demand for cargo-only flights remained high throughout the quarter and we flew 602 one-way cargo flights, mainly between Finland and Asia. Cargo exceptionally accounted for over 70 percent of our revenue for the quarter, and its profitability remained at a good level. The cargo traffic also had a profound social impact as the cargo we transported included personal protective equipment used in managing the pandemic and in ensuring security of supply. Otherwise our result reflected a near-complete halt to our traffic,” said Topi Manner, CEO of Finnair.

The number of passengers decreased by 61.0 percent to 2.8 million in the first half of the year. Finnair estimates that with the current minimum network, its comparable operating result will be a daily loss of approximately 2 million euros throughout the second quarter, despite cost adjustments.

Finnair's current assumption is that it will operate the current minimum network throughout Q2 due to the coronavirus situation. At the same time, the company estimates that the recovery of air traffic will begin in stages from the beginning of July 2020. However, the pace of recovery cannot be assessed at this stage, leaving the outlook for the second half of 2020 unclear. Finnair is preparing for the future with different scenarios to have the ability to quickly adapt its capacity to changing demands.

Manner explained: “In Europe and in Asia, countries are slowly opening their borders and lifting travel restrictions. Finnair has started to operate a more meaningful network of routes and we will keep adding flights gradually and flexibly according to demand as the year progresses depending, however, on the pandemic development and lifting of travel restrictions.

“We have also continued implementing our cost reduction programme. As communicated in May, we target a permanent annual cost reduction of nearly 80 million euros from the beginning of 2022, compared to 2019. We seek savings from, among others, real estate costs, aircraft leases, salary and incentive structures, sales and distribution costs as well as IT and administrative costs. In line with our strategy, we also continue the streamlining, digitalisation and automation of our operations. The first results from savings measures have been encouraging. We are also adapting our volume-driven costs to demand, and in this for example the flexible Finnish furlough practices have been of assistance.”