Finnair is flying away from its hotels and restaurants

Finnair is selling control of its hotel and restaurant business as part of a broader restructuring of the group which has seen its airline profits virtually halved over the past six months.

The bulk of the hotel and restaurant business is being sold and Finnair is putting its real-estate interest in the Helsinki Inter-Continental hotel into a new company in which it will keep a 40% stake. Finnair has not put a value on the deals, but the new real estate company alone is valued at around FIM400 million ($88 million).

The announcement came as the group revealed that its half-year profits tumbled to FIM233.5 million, after being hit by sluggish traffic growth and rising costs which have already caused a slump across continental Europe. The group posted record profits at the end of its 1995/6 financial year, but warned then that performance was expected to dip in the 1996/7 year.

Finnair president Antti Potila says that the group has identified "structural changes" to add FIM500 million to net profits by the turn of the century. Costs were up by 8.8% over the half year, led by a 22% rise in fuel costs, while revenues were largely unchanged as international scheduled traffic ground to a "virtual standstill". The group also lost FIM20.5 million from the bankruptcy of Spanish tourist airline Centennial, which leased aircraft and used the group's maintenance services.

Source: Flight International