Finnair reported a first-quarter loss of €15.8 million ($20.6 million), an 18.3% improvement on the €19.3 million loss recorded in the year-ago period.

The airline said the results were due to increasing passenger traffic, particularly in Asia and Europe, leading to a load factor of nearly 80% without any significant cutback in capacity.

Deputy CEO Ville Iho said: “Finnair’s 90th anniversary year has started well. In January-March, our traffic measured by revenue passenger kilometers grew by over 5% year-on-year, despite capacity remaining at the level of the comparison period. Our operational result improved year-on-year, but showed a loss of €17.7 million. The business environment in our industry continues to be characterized by intense competition, cost pressures and dramatic structural changes. It is important that we continue our determined effort to improve Finnair’s competitiveness by seeking growth and reducing costs.”

Turnover was up just 0.2%, but passenger numbers increased 4% for the period. Cargo, however, saw a 15.4% downturn in volume, from 37,892 tonnes during the year-ago period to 32,049 tonnes during the first quarter. Cargo revenue was also down 0.2%. ASKs grew 0.8% from 7.6 million to 7.7 million, while RPKs were up 5.2% to 6.1 million from 5.8 million in the 2012 first quarter.

CASK was up 0.9% from 6.51 cents/ASK (4.48 excluding fuel) to 6.57 (4.45 cents/ASK excluding fuel).

“By the end of March, we had achieved permanent annual savings of €119 million, out of the total target of €140 million we set in August 2011 for our structural change and cost reduction program,” Iho said. “Despite the good progress made in the implementation of the program, achieving the overall target will require a great deal of work and difficult decisions.”

Negotiations are underway concerning “significant savings in personnel costs” necessary to achieve additional cost savings of €60 million announced in October 2012.

Iho said the outlook for the rest of the year remains unchanged and the airline is still hoping to turn a profit by year end.

“The first quarter has given us a solid foundation for building our future. We face cost challenges, but we also have a clear direction and a growth story,” Iho said.  He stressed, however, that the uncertain economic outlook in Europe, high fuel prices and currency fluctuations continue to present challenges.

Iho pointed out that, following the resignation of president and CEO Mika Vehviläinen in January, responsibility for seeing through the cost-cutting program and returning the airline to profit would rest with Pekka Vauramo, who takes over at the beginning of June.