Finnair's profits rise on strong Asian demand

[HELSINKI] Finnair has reported better than expected quarterly profits, helped by deploying newer, more efficient aircraft and good demand on its Asian routes, its main target market.

The Finnish airline depends on attracting traffic flows between Europe and Asia to its Helsinki hub and is modernising its aircraft fleet with a plan to acquire 19 new Airbus A350 widebody planes, 11 of which have now been delivered.

Its third-quarter core operating profit was up 80 per cent at 119 million euros (S$190.613 million), ahead of the average of analysts' forecasts of 99 million euros, according to a Reuters poll.

Shares in the company were up three per cent at 11.28 euros at 0755 GMT.

"They have managed to load the new planes well due to the strong demand, and they have done well in ticket pricing," said Jari Raisanen, analyst at OP Equities, who has a "reduce" rating on the stock, which is up in price by 150 per cent on a year ago.

Finnair maintained its full-year profit forecast range of 135-155 million euros, having already made 147.5 million euros in the first nine months of the year ahead of its seasonally slow fourth quarter.

"This (reiteration of the forecast range) suggests that there is some uncertainty regarding the fourth quarter," Mr Raisanen said.

The share price has risen 185 per cent this year on the back of growth prospects as well as M&A speculation.

Finnair has repeatedly urged the Finnish state, which owns 55.8 per cent of the company, to scrap its obligation to retain a majority stake, but the government has not supported the idea so far.

"Finnair's capability to generate profits should improve further in 2018 and 2019 to justify the current valuation ... Also, it is hard to see any room for consolidation in the short term," Mr Raisanen said.

REUTERS