Finnair stock plunges as terrorism anxiety hurts travel demand

Finnair shares fell the most in almost three years after the carrier scaled back plans to add flights this year as terrorism in Europe hurt demand for travel. Finnair dropped as much as 10%, the steepest intraday drop since October 2013, and was down 7% at E4.89 as of 11:33 a.m. in Helsinki. The Finnish airline will increase seating by 7% this year instead of a planned 8%, with the slowdown also prompted by Airbus Group SE’s delivery delays of A350 planes, the carrier said in a statement. The airline has been more optimistic about increasing traffic than competitors, saying in May that it would increase capacity by as much as 10% annually through 2018. Terrorist incidents in French cities, Brussels and Istanbul this year have deterred US and Asian travellers from making trips to Europe, prompting airlines to reduce expansion plans. “With all the activity in Europe, with the incidents that have taken place, we’ve seen some group cancellations, and it’s reducing our revenue forecasts,” CEO Pekka Vauramo said Wednesday. At the same time, the effects of terrorism on demand are likely to only be short-term, he said.<br/>Finnair posted a Q2 comparable operating profit of E3.2m, versus a year-earlier loss, while revenue increased 4.7% to E569.6m. The airline said separately that it’s planning a cost-reduction project targeting 20m euros in annual savings by the end of June 2017 as it waits for a better operating environment.<br/>