Finnair is planning to reduce European capacity after warning that its fuel expenses are likely to rise by more than 35% this year, as a result of the unabated increase in the price of oil.

The Oneworld alliance partner turned in a profitable first quarter but chief executive Jukka Hienonen, at a recent briefing in Helsinki, stated that the outlook was “so misty” that it was “impossible” to give financial guidance beyond June.

But today he says the airline can “assume” the full-year operating result will fall below last year’s level, adding: “Factors troubling the entire sector – rapidly-rising oil prices and a sharp fall in passenger load factors – are also clearly weakening Finnair’s profit-making capacity.”

He says the increase in the cost of jet fuel, from $850 to $1,300 per tonne since the beginning of the year, will increase Finnair’s fuel bill to more than $600 million over 2008, despite the airline’s hedging programme.

“Effects of the world economy on air transport are already evident as a trend that will decrease passenger demand,” adds Hienonen. “We are now planning to reduce capacity, particularly in Europe.”

Finnair has yet to detail the nature and extent of any capacity cuts.

Source:'s sister premium news site Air Transport Intelligence news

Source: Flight International