Loss-making Tallink hopeful that travelling will restart in summer

Paavo Nõgene, chairman of the management board of Tallink Grupp. Photo: Madis Veltman

Tallink, having reported a 34 million euro quarterly loss, is hopefully looking towards summer. Paavo Nõgene, chairman of the management board of Tallink Grupp, said that they hope to realize at least some plans prepared for the summer season.

“We aim to ensure that the totals of alt least other quarters could show better results. On behalf of the Tallink Grupp team I can say that we are definitely ready and motivated to implement the planned activities,” Nõgene stressed.

Katri Link, Tallink’s head of communications, added that since it is not yet known when travel restrictions in their home markets would be relieved, it is difficult to forecast anything about summer travel. “We have at least partial plans for the summer and scenarios A, B and C for the rest. We shall announce the initial plans and travel opportunities in the near future; further plans will have to wait for greater clarity from the government regarding the relaxing of restrictions, but we intend to make the decisions within May,” Link said. “It is obvious that people want to travel and make plans. All out polls of clients show that. The latest poll of Finnish clients showed that only five percent of the respondents plan to stay home this summer. The percent was over ten last summer.”

The start of commuting was postponed

Link assured that the crews of Tallink vessels and the shore support services are prepared for the summer travel. “A lot of security procedures have been established, staring from a reduced number of passengers up to 75 percent of the ship’s capacity to all kinds of dispersed and contact-free services.”

The Finnish government announced last year that it will extend the current travel restrictions until May 25, meaning that commuting to work would not be restored in May. The epidemic situation in Sweden is still complicated and does not allow Tallink open routes to Sweden from Tallinn, Helsinki and Riga. “It is presently possible to travel to Sweden from Paldiski to Kapellskär on Tallink cargo vessels Sailor or Regal Star, which carry passengers with cars since last summer, or through Turku to Stockholm on Tallink’s Baltic Princess or Galaxy,” Link said. “We are keeping a close eye on the developments in Sweden and are ready to make decisions ´if the situation and developments permit it.”

The departures from Tallinn and Stockholm for Helsinki are currently possible only in case of certificates proving being uninfected or recovered from the disease. “We have appealed to the Finnish institutions together with other shipping firms asking to be able to accept vaccination certificates which, for example, Finnair is using. We believe that the use of vaccination passports the use and procedures of which have been agreed upon by various countries, would simplify free travel significantly,” Link added.

Employee number has been halved

The number of employees of the company has declined from 7,200 to 3,900. Significant cuts in labour expenses were obvious already in the first quarter of this year and the firm presumes that the impact of tough staff decision made last year will be felt even later. “Travel will not be restored to the pre-crisis levels this summer, therefore it cannot be expected that we can offer the same employment volume as before March 13, 2020. We have the staff necessary for implementing the plans for summer and they are ready for work,” Link said.

The shipping firm made a loss of 34.4 million euros in the first quarter while turnover dropped 65 percent. “We know that we will be facing a very complicated quarter as the pandemic situation turned for the worse and it was clear that states will establish new travel restrictions, while the existing ones will continue. Last year we had at least two months of more or less normal operations in the first quarter, while the whole three months of this year’s first quarter passed in an environment of tough travel restrictions,” Nõgene commented the results of the 2021 first quarter.

The volume of investments of the concern in the first quarter of 2021 was much more modest compared with the same period in 2020 and amounted to 4.3 million euros. Due to the changed economic situation and the decision to suspend ferry operations, investments related to the vessels were kept at the minimum level and only the urgently necessary maintenance and repair were carried out. Major investments were fully made already in 2020; therefore the necessary investment levels of the concern for the 2021 business year are expected to remain low.

The enterprise continues operating with a liquidity buffer of 96.4 million euros, which comprises cash credit as well as unused credit opportunities. The concern also has a 90 million euros worth share of unused working capital loan in the Nordic Investment Bank.

“Despite the significant decline of our income in the first quarter I am glad that we managed to prevent a similar fall of EBITDA thanks to our great efforts to control the costs, improve efficiency and several support measures we could rely on. Compared with the first quarter results of a regular business year for instance in 2019, our income dropped in this year’s first quarter by 152 million euros, but the overall impact on our EBITDA was still approximately -10 million euros. We are therefore very grateful to the governments of our home marker as well as our employees for the support and efforts enabling us to stay afloat throughout hard times,” Nõgene said.

“”I am also glad that the number of Tallink Group shareholders has increased even in these challenging times and has reached 25,702 shareholders as of today. For me this is a clear sign of the shareholders’ continued confidence in us and faith in the measures we have taken to ensure the sustainability of our enterprise. We are planning to do everything in our power to offer our shareholders good yield on dividends in the future,” Nõgene assured.