Finnair Financial Statements Release 1 January–31 December 2021

Thu, Feb 17, 2022 08:00 CET

Finnair Plc Financial Statement Release 17 February 2022 at 9.00 a.m. EET

Travel increased and EBITDA turned positive; Omicron’s negative impact notable but short-term.

October – December 2021

Earnings per share were -0.06 euros (-0.01)*.
Revenue increased by 305.5% to 413.5 million euros (102.0).
Comparable operating result was -65.2 million euros (-162.9). Operating result was -60.2 million euros (-14.6).
Cash funds were 1,265.7 million euros (823.7) and equity ratio was 11.8 per cent (24.6).
Net cash flow from operating activities was 124.6 million euros (-178.6), and net cash flow from investing activities was -66.8 million euros (135.3).**
Number of passengers increased by 447.2% to 1.5 million (0.3).
Available seat kilometres (ASK) increased by 392.3%.
Passenger load factor (PLF) was 49.6% (29.2).

January – December 2021

Earnings per share were -0.34 euros (-0.51).
Revenue increased by 1.1% to 838.4 million euros (829.2).
Comparable operating result was -468.9 million euros (-595.3). Operating result was -454.4 million euros (-464.5).
Net cash flow from operating activities was -25.3 million euros (-1.043.1), and net cash flow from investing activities was 309.6 million euros (351.6).**
Number of passengers decreased by 18.2% to 2.9 million (3.5).
ASK declined by 6.5%.
PLF was 42.8% (63.0).
The Board of Directors proposes to the Annual General Meeting that no dividend be distributed for 2021.

* Unless otherwise stated, comparisons and figures in parentheses refer to the comparison period, i.e., the same period last year.

** In Q4, net cash flow from investing activities includes 79.2 million euros of investments (57.3 million euros of redemptions) in money market funds or other financial assets (maturity over three months). In 2021, the investments totalled in net terms 67.5 million euros (439.9 million euros of redemptions). They are part of the Group’s liquidity management.

Outlook

guidance issued on 26 October 2021:

Even though travelling in Europe has opened and will open to the United States and Thailand in November, the travel restrictions will continue to have a dampening impact on demand especially in Asia. Based on an increased level of vaccinations, Finnair expects Asia to open to travelers more meaningfully early 2022 - exclusive of China, which is expected to open only after the first half of 2022. While cargo continues to be strong and the cost savings programme delivers as planned, due to the travel restrictions, incremental costs caused by the ramped-up capacity and higher fuel price, the comparable operating loss in Q4 2021 is expected to be of a similar magnitude as in Q3 2021 despite the gradual increase in revenue. The company estimates that the operating cash flow remains positive in Q4 2021.

Further, due to the slow recovery of Asian traffic, Finnair estimates that the comparable operating losses will continue also during the first half of 2022. Even though Finnair estimates that the operational environment in the second half of 2022 will be closer to the pre-pandemic era, the company expects a return to its 2019 traffic levels, as measured in annual ASKs, in 2023.

Finnair will update its outlook and guidance in connection with the financial statements bulletin for 2021.

NEW GUIDANCE ON 17 February 2022:

Travelling in Europe and to the United States is open but Asia remains highly restricted for travel, exclusive of countries such as Thailand, Singapore and India. There is prolonged uncertainty of when China or Hong Kong would be opening for travel. Due to e.g., the Omicron variant, Finnair now estimates that other Asian markets would gradually open for travel towards the end of Q2 2022.

In comparison to Q4 2021, Omicron is having a notable but short-lived adverse effect on revenue and costs in Q1 2022. Further, the ongoing travel restrictions will continue to soften demand, particularly to and from Asia going forward. Due to these factors as well as increased fuel price and incremental costs caused by the need to ramp up capacity for summer 2022, Finnair’s comparable operating loss in Q1 2022 is expected to be of a similar magnitude as in Q1 2021. Finnair reiterates its previous estimate that the comparable operating losses will continue also during the entire first half of 2022.

The latter half of 2021 demonstrated that there is robust pent-up demand for travel. During the first half of 2022, the impact of travel restrictions on Finnair’s business is expected to fade. Therefore, the company still estimates that the operational environment in the second half of 2022 will be closer to the pre-pandemic era, exclusive of China and Hong Kong, and expects a return to its 2019 traffic levels, as measured in annual ASKs, in 2023.

Finnair will update its outlook and guidance in connection with the Q1 2022 interim report.

CEO Topi Manner:

During the last quarter of 2021, our recovery continued. The number of our flights grew from October onwards, and passenger numbers improved every month. Our long-haul passenger numbers also started to recover as the United States, Thailand, Singapore, and India opened for travel. Finnair also launched non-stop flights to Thailand and the United States from Stockholm Arlanda. Towards the end of the quarter, the impacts of the Omicron variant started to be visible in air traffic and in December, several countries reintroduced tighter travel restrictions, further impacting demand for air travel. Increased Omicron-related sick leaves caused unexpected resourcing issues not only at Finnair but also in our partners’ operations.

We took the first steps in Finnair’s recovery during 2021 and continued to rebuild the company. Our revenue totaled 838.4 million euros, still less than 30 per cent of the 2019 level. The comparable operating result for the year remained heavily negative at -469.9 million euros. The gradual recovery of passenger traffic started in late summer as vaccination coverage improved and travel restrictions were partially removed. Due to global supply chain disruptions, cargo demand was exceptionally strong throughout the year.

We continued our comprehensive financing measures throughout the year. In early 2021, we signed an agreement on a 400-million-euro hybrid loan with the State of Finland. This facility is still undrawn, but it will have a stabilising effect on Finnair’s balance sheet. We also implemented an over 400-million-US dollar sale and leaseback arrangement covering four Airbus A350 aircraft and issued a 400-million-euro bond. I want to thank sincerely both the state owner and all our other investors for the trust they have placed in us. We had c. 116,000 shareholders at the end 2021, and the number grew by more than 35 per cent year-on-year.

Our cost savings programme proceeded well and we reached our target of 200 million euros of permanent annual cost savings, based on 2019 volumes. The achieved cost savings decreased our loss already this year, and their full run-rate impact will be visible starting from 2022.

We aim to be a modern premium airline. A vital element of this is our new long-haul customer experience, which we introduced after the period. We are renewing the cabins of all our long-haul aircraft and are introducing a new premium economy travel class. This 200-million-euro investment has been in development for years and it is essential to secure our competitiveness.

Our net promoter score remained at a high level, 38, for the whole year. Finnair was chosen as the best airline in Northern Europe in the Skytrax customer survey for the eleventh consecutive time, for which we are grateful to our customers. Ramping up flights after a long period of low traffic brought operational challenges, which were further amplified by the unanticipated impacts of the Omicron variant at the end of the year. This was reflected in weaker on-time performance and in congestion in our customer service channels when many customers changed their travel dates. This year, ensuring high-quality customer service and on-time performance are in special focus for us, as they are integral for Finnair’s recovery from the pandemic.

Omicron has proven to be milder than the previous variants and as the Omicron wave starts to wane, European countries are removing restrictions. The pandemic is turning into an endemic phase, where COVID-19 is treated as a regular respiratory infection.

We estimate that, aside from China and Hong Kong, by next summer we will be closer to a normal operating environment, even though the opening of Asia is delayed from our earlier estimate. The latter half of 2021 proved that there is great pent-up demand. We are preparing for the increasing demand for summer 2022 by calling employees back from furloughs and the opening of our new long-haul routes to Busan, Dallas, Seattle, and Tokyo Haneda.

The year 2021 was, like its predecessor, a difficult one for Finnair. The prolonged pandemic and the rapid changes in our operating environment were wearing for our personnel. I want to deliver my special thanks to the entire Finnair team for their commitment and for delivering a high-quality customer experience under these strenuous circumstances. I believe that 2022 will bring better predictability and joy of achievement to our employees as we take significant steps forward in recovering from the pandemic.

Dividend policy and the Board’s proposal for the distribution of profit

The aim of Finnair’s dividend policy is to pay, on average, at least one-third of the earnings per share as a dividend over an economic cycle. The aim is to take into account the company’s earnings trend and outlook, financial situation and capital needs in the distribution of dividends.

In 2021, earnings per share were -0.34 euros (-0.51). Finnair Plc’s distributable equity amounted to 73,709,760.76 euros on 31 December 2021. The Board of Directors proposes to the Annual General Meeting that no dividend be distributed for 2021.

Financial reporting in 2022

The publication dates of Finnair’s financial reports in 2022 are the following:

Interim Report for January–March 2022 on Wednesday 27 April 2022
Half-year Report for January–June 2022 on Tuesday 19 July 2022
Interim Report for January–September 2022 on Friday 28 October 2022

This text is a summary of Finnair's Financial Statements Release 1 January–31 December 2021. The full report is available as an attachment to this report.

FINNAIR PLC
Board of Directors

Briefings

Finnair will hold a results press conference (in Finnish) on 17 February 2022 at 11:00 a.m. at its office on Tietotie 9. It is also possible to participate in the press conference via a live webcast at https://finnairgroup.videosync.fi/2022-0217-press.

An English-language telephone conference and webcast will begin at 1:00 p.m. Finnish time. The conference may be attended by dialling your local access number +358 (0)9 8171 0310 (Finland), 08 5664 2651 (Sweden), 033 3300 0804 (UK) or +44 (0)33 3300 0804 (all other countries). The confirmation code is 11247595#. To join the live webcast, please register at https://finnairgroup.videosync.fi/2021-q4.

For further information, please contact:

Chief Financial Officer Mika Stirkkinen, tel. +358 9 818 4960, mika.stirkkinen@finnair.com

Director, Investor Relations Erkka Salonen, tel. +358 9 818 5101, erkka.salonen@finnair.com

Distribution:
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Finnair is a network airline, specialising in connecting passenger and cargo traffic between Asia and Europe via the short northern route. Sustainability is at the heart of everything we do –  Finnair intends to reduce its net emissions by 50% by the end of 2025 from the 2019 baseline and achieve carbon neutrality latest by the end of 2045. Finnair is a member of the oneworld alliance. Finnair Plc’s shares are quoted on the Nasdaq Helsinki stock exchange.