Finnair steps up hunt for cost savings after first-half loss

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Finnair is redoubling its efforts to secure structural cost savings after reporting an operating loss of €25.2 million for the first half of 2011.

The result is an improvement on the €33.3 million operating deficit recorded for the same period a year earlier, and the carrier also enjoyed a 13.9% uplift in turnover. However Finnair said it has initiated a project to identify €140 million worth of structural cost savings by 2014.

The second quarter saw traffic growing in Finnair's main markets, and the sigining of an agreement to acquire Finnish Commuter Airlines in partnership with Flybe.

"Our profitability has not matched expectations, even though our costs, excluding fuel, have developed according to plan," said Finnair CEO Mika Vehviläinen, referring to the second quarter performance.

"The situation faced by our mainline business, particularly European feeder traffic, is challenging. In the long term, our cost structure compared with many of our competitors is simply unsustainable," he added.

"Our structures and ways of working are based on a legacy from a different era and no longer work in our current environment."

The second quarter was impacted by the continued high price of oil, the Japanese earthquake and unrest in the Middle East, said the carrier. Unit revenue per available seat kilometre fell 4.3%.