Financial Result
The Group's result after financial items was -21.7 million euros. The corresponding figure for 2002 was 54.4 million euros. Operating profit before depreciation, aircraft leasing payments and capital gains (EBITDAR) weakened 26.3 per cent to 155.9 million euros (211.6 million). The EBITDAR margin was 10.0 per cent, compared with 12.8 per cent the previous year.
Turnover fell by 6.0 per cent to 1,557.6 million euros. Unit revenues for passenger traffic declined by 8.5 per cent. This was due to a fall in price levels, the decline in premium class volumes, weak dollar, the price reform implemented in September and growth in the relative share of long-haul traffic. In long-haul traffic the level of prices, but also the level of production costs, is lower than average. Unit revenues for cargo traffic fell by 7.3 per cent, which contributed to a fall in unit revenues overall of 9.1 per cent.
Operating costs fell during the financial year by 2.2 per cent and unit costs of flight operations by 7.2 per cent. The objective of the cost-cutting and operational efficiency programme, initiated in spring 2003, is to reduce unit costs by at least 15 per cent in the years 2003-2005. Overall, the programme has proceeded according to plan and during 2003, approximately one third of the targeted savings were achieved.
There were significant falls in the cost of fuel, maintenance, ground handling, catering and marketing as well as depreciation. The cost of outsourced operations contributed to a rise in other operating costs.
A weaker US dollar also contributed to the decline in operating costs. The Group has clearly more dollar-denominated costs than revenues. The most significant dollar-denominated items are fuels and aircraft leasing payments. Excluding foreign exchange hedging, a ten per cent weakening of the dollar makes an annual positive contribution to the result of around 20-25 million euros.
Personnel costs rose by 1.0 per cent. The proportion of the Group's total operating costs accounted for by personnel costs rose to 30.6 per cent, compared to 29.7 per cent in 2002. In the year under review, contributions to Finnair's pension fund totalled 84.5 million euros, nearly the same as in the previous year. The assets of Finnair's pension fund fully cover its pension liabilities.
Capital gains amounted to 22.1 million euros. The most significant items were a 12.2 million euro capital gain arising from a sale and lease-back arrangement for one MD-11 aircraft and a 2.8 million euro gain from the sale of Finnair Catering Oy's wine wholesaling business. The previous year, capital gains came to 35.5 million euros.
Return on capital employed was 0.0 per cent (7.6%) and return on equity -2.5 per cent (5.9%). Earnings per share were -0.19 euros, whereas the year before the figure was 0.43 euros. Equity per share at the end of the financial year amounted to 7.24 euros, compared with 7.58 euros the year before. |