Wednesday September 27, 2023
Finavia incurs €14.5m loss in H1
Published : 01 Sep 2023, 02:50
Country´s airports operator Finavia incurred a loss of 14.5 million euros in the first six months of this year, according to the financial report published by the company on Thursday.
The reported loss was particularly due to the low number of passengers at Helsinki Airport as a result of the closure of Russian airspace, said Finavia in a press release.
“We estimate that passenger volumes and, consequently, Finavia's air traffic revenues will remain low for a long time due to the closure of Russian airspace. Due to moderate passenger volumes, Helsinki Airport's revenues are not adequate to cover the operation of all regional network airports or future investment needs. Despite the fact that we are actively continuing our work to launch new flight connections, as well as implementing cost-cutting measures and taking other actions to ensure financially sustainable operations, the financing of the airport network is facing a dire situation,” said Finavia's Chief Executive Officer Kimmo Mäki.
Most of Finavia’s revenues are derived from air traffic revenue, such as passenger charges and landing charges paid by airlines.
The number of passengers at Helsinki Airport is still only about 70% of the number of passengers prior to the COVID-19 pandemic in January–June 2019.
The passenger volumes of Helsinki Airport have an impact on the whole of Finland.
In accordance with the network principle, the operating costs of regional airports have been covered mainly by the air traffic revenues of Helsinki Airport.
Air traffic, however, continued to grow in January–June 2023.The growth in passenger volumes increased Finavia's revenue from air traffic.
The operating margin of the company before extraordinary items improved by 131% and came to EUR 43.2 million. During the review period, the company also accomplished the goals of the cost-cutting programme ahead of schedule.
The cost-cutting programme launched due to the COVID-19 pandemic included, for example, a reduction of EUR 300 million in operational costs and investments.
The January–June 2023 business review shows that the recovery of passenger volumes to the level prior to the COVID-19 pandemic has been slow, especially at Finavia's smaller network airports. The passenger volumes of small airports have been declining for years and there are no changes in sight that would materially affect the negative trend.
Temporary public financing has been granted for flight connections to Joensuu, Jyväskylä, Kajaani, Kemi-Tornio, Kokkola-Pietarsaari, Pori and Savonlinna.
The public financing of Joensuu, Jyväskylä, Kajaani, Kemi-Tornio and Kokkola-Pietarsaari flights will end in April 2024. Finavia estimates that continuing purchased traffic services to low-traffic airports would cause Finavia annual losses of about EUR 20 million.
“When talking about subsidies for regional air traffic, it would be good to also take into account the impact of the decision on Finavia's finances. No aircraft can safely land or take off without a well-operated airport,” said Mäki.
The trends of passenger volumes at regional airports have been very varied. The development of passenger volumes during the review period was particularly positive at Tampere-Pirkkala, Rovaniemi and Turku Airports due to the opening of new direct international flight connections.
Rovaniemi has even exceeded its passenger volume in 2019, which can be considered a strong indication of Lapland's international appeal as a tourist destination. The Lapland airports of Kittilä, Ivalo and Kuusamo came close to the level of 2019.