HELSINKI, Oct 28 (Reuters) - Finnair PLC reported a second consecutive quarterly loss on Wednesday and said the final three months of the year are likely yield a similar result as restrictions curb air travel.

"We estimate that the ramp-up in terms of demand starting to pick will materialise on a bigger scale at the start of the summer season, so basically end of March, April, next spring," Chief Executive Topi Manner told a conference call.

Finnair, which is 55.9% state owned, made an underlying operating loss of 167 million euros ($197 million) for July-September, compared with a 174.3 million euro loss in the previous quarter and a profit of 100.7 million euros a year earlier.

"Travel restrictions, which are particularly strict in Finland, led us to deviate from our plans and we continued to operate a restricted network throughout the quarter," Manner said.

Evli analysts said Finnair's loss in the quarter was smaller than markets had expected, but revenue, which decreased by 88.7% to 97.4 million euros, was below market expectations.

Shares in the company were down 1.6% at 1130 GMT, while the Helsinki stock exchange index was down 2.5%.

The airline said it would increase its cost-cutting target by 40 million euros to 140 million euros and reduce headcount by almost 1,100 from the levels at the start of the year.

For more savings and to ensure competitiveness after the pandemic, Finnair said it was in talks to remove some index increments from its staff pensions and that the change was pending approval from authorities.

The airline said the planned reduction in pension expenses, which it has not yet included in its renewed cost-cut target, would have a one-off positive impact of at least 85 million euros on fourth-quarter earnings, without an immediate impact on cash flow.

Finnair said the talks were ongoing and therefore the positive impact on earnings could be significantly higher than 85 million euros.

"Based on current assumptions, the revenue and capacity... will both decrease more than 70% in 2020 compared to 2019," the airline said in its updated outlook.

Manner said the company had seen progress in its talks with Airbus to defer the delivery of the remaining three A350 airliners of its total order of 19, and expects to be able to confirm the deferral during this quarter. ($1 = 0.8461 euros) (Reporting by Anne Kauranen; Editing by David Goodman, Christopher Cushing and Jan Harvey)