Finnair Reports Q2 Losses, Plans to Outsource & Cut Pilots’ Pay

Finnair reduced its full-year profit forecast following Q2 losses. The airline plans to cut pilots’ pay and outsource some staff.

Finnair Group released their interim report for January 1 through June 30 on Friday. Revenue fell by 7.2 percent year-on-year to $753.6 million. In terms of core operating results, the airline lost $26.8 million in the second quarter. During the same period last year, Finnair reported a profit of nearly $10 million, according to Reuters.

Finnair is the latest major European carrier to issue a profit warning due to disappointing earnings this year. Air France-KLM and Lufthansa both issued similar warnings.

In the first six months of 2014, Finnair recorded a net loss of $32 million against a profit of $24 million last year. On Friday, the airline reduced its full-year profit forecast.

According to Reuters, “stiff competition from discount carriers, high fuel prices and unfavorable exchange rates” all played a role in diminished profits. The Helsinki-based airline also is up against “strong labor union resistance” while attempting to “implement planned cost cuts.”

“Due to delays in the personnel cost reduction negotiations and the unfavorable market conditions driving the decline in unit revenue, Finnair estimates that its 2014 operation result will show a significant loss,” a portion of the Finnair report read.

The possibility that Russia might ban European carriers from its airspace also creates uncertainty for the airline. Finnair has expanded its routes into Asia and is a heavy user of Russian airspace.

Finnair previously issued a bulletin announcing it would outsource around 500 employees over the next two years, including cabin crew on about “20 long-haul and short-haul routes” due to failed negotiations with cabin personnel.

“Negotiations with pilots are proceeding, and we expect to have a deal in early September,” Finnair CEO Pekka Vauramo told Reuters.

[Photo: Finnair Group]