After posting another set of miserable quarterly numbers, Finnair (OMXH: FIA1S) said it is beginning discussions with potential cooperation partners for a low-cost joint venture to expand Nordic region base. Finnair’s loss-making European traffic should also be a part in some way. Local news threw the name of Air Berlin as one potential mate.
Some see this announcement as a tactic for leverage in ‘negotiations’ vs. current highly paid personnel. Then again it would also be a convenient way to do away with a lot of cost altogether if more and more operations were moved into new joint venture. Finnair is targeting 140 million Euros in annual savings by 2014.
The bankruptcies of Spanair and Malev in the last few days underscore the ongoing pricing war in aviation industry. It also shows that government owned airlines may have reached the end of the road. Minister for International Development and ownership Heidi Hautala admitted this in an interview with Yle news and said that it might be wise for Finnish government to do away with majority ownership. This would require changing the law.
Operational result in Q4 2011 slumped to over minus 30 million Euros despite rapid revenue growth. Full-year EPS is -0.75 and return on equity -10.9%. CEO Mika Vehviläinen is trying to do where others have failed and turn around a company that has performed miserably ever since it lost its monopoly protection a number of years ago. The stock is languishing at an all time low below 2.5 Euros.
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