Finnair Group Financial Statements Release 1 January – 31 December 2022
Finnair Plc Financial Statement Release 15 February 2023 at 9.00 a.m. EET
Comparable EBIT positive for the second consecutive quarter; work to restore profitability continues.
October – December 2022
- Earnings per share were 0.03 euros (-0.06)*.
- Revenue increased by 66.2% to 687.3 million euros (413.5).
- Comparable operating result was 17.9 million euros (-65.2). Operating result was 38.0 million euros (-60.2).
- Exceptionally high fuel price had an adverse cost impact of c. 94 million euros** year-on-year.
- Cash funds were 1,524.4 million euros (1 265.7) and the equity ratio was 9.9 per cent (11.8).
- Net cash flow from operating activities was 29.9 million euros (124.6), and net cash flow from investing activities was -54.3 million euros (-66.8).***
- Number of passengers increased by 60.9% to 2.5 million (1.5).
- Available seat kilometres (ASK) increased by 32.4% to 8,185.5 million kilometres (6,180.9).
- Passenger load factor (PLF) was 72.3% (49.6).
January – December 2022
- Earnings per share were -0.36 euros (-0.34).
- Revenue increased by 181.1% to 2,356.6 million euros (838.4).
- Comparable operating result was -163.9 million euros (-468.9). Operating result was -200.6 million euros (-454.4).
- High fuel price had an adverse cost impact of c. 375 million euros** year-on-year.
- Net cash flow from operating activities was 259.0 million euros (-25.3), and net cash flow from investing activities was -75.5 million euros (309.6).***
- Number of passengers increased by 218.9% to 9.1 million (2.9).
- Available seat kilometres (ASK) increased by 158.8% to 31,298.4 million kilometres (12,094.2).
- Passenger load factor (PLF) was 67.6% (42.8).
- The Board of Directors proposes to the Annual General Meeting that no dividend be distributed for 2022.
* Unless otherwise stated, comparisons and figures in parentheses refer to the comparison period, i.e., the same period last year.
** Fuel price impact including impact of currencies and hedging.
*** In Q4, net cash flow from investing activities includes 38.9 million euros of investments (79.2) in money market funds or other financial assets (maturity over three months). In 2022, the investments totalled to 12.8 million euros (67.5). They are part of the Group’s liquidity management.
Outlook
GUIDANCE ISSUED ON 28 OCTOBER 2022:
Finnair estimates that in Q4 2022, it will operate an average capacity of c. 70 per cent, as measured in ASKs, compared to the corresponding period in 2019. With the leases of aircraft with crew to other airlines, the total capacity deployed would be c. 80 per cent, depending on future lease agreements.
In the short term, the strong demand for travel is predicted to continue, which will support Finnair's unit revenues as in the summer months of 2022. Significant uncertainty in Finnair’s operating environment prevails, however, because the market price of fuel is exceptionally high and the length of the Russian airspace closure, the impact of inflation on demand and costs, as well as the development of the COVID-19 pandemic and related measures are unclear. The company reiterates its guidance according to which the 2022 comparable operating result will be significantly negative for a third consecutive year.
Finnair will update the progress in the implementation of its new strategy as well as provide guidance and outlook for 2023 in connection with the financial statements bulletin for 2022.
NEW GUIDANCE ON 15 FEBRUARY 2023:
Finnair estimates that in 2023, it will operate an average capacity of 80–85 per cent, as measured in ASKs, compared to 2019. The capacity is impacted by the development of demand, e.g., increase in travel in Chinese routes, and potential leases of aircraft with crew to other airlines.
Finnair estimates that the strong demand for travel will continue in the short-term, supporting its unit revenues as in the second half of 2022, but the continuing general economic uncertainty will weaken the visibility of travel demand development during 2023. With the fading impacts of the pandemic following the opening of China, Finnair expects normal seasonality to return. Accordingly, the first quarter of the year is seasonally the weakest and results typically in negative EBIT, while the summer months are the high season in travel.
Significant uncertainty in Finnair's operating environment continues, as the price of fuel is high and the length of the Russian airspace closure and the impact of inflation on demand and costs are unclear.
Finnair estimates that its 2023 revenue will significantly increase year-on-year, especially as the first half of 2022 was heavily burdened by both the pandemic and the closed Russian airspace. Nonetheless, the company estimates that its revenue will not yet reach the level of 2019.
Finnair will update its outlook and guidance in connection with the Q1 2023 interim report.
CEO Topi Manner:
Finnair's comparable operating result was positive for the second consecutive quarter, and the net result was 53.3 million euros, turning positive driven by the weakening US dollar for the first time since the last quarter of 2019. This is yet another important step in the right direction, but the road towards profitability on an annual level is a long one, and full of challenges in the operating environment.
During the review period, Finnair carried 2.5 million passengers and our revenue was 687.3 million euros (413.5). Although strong demand continued to support our unit revenues, both passenger and revenue figures declined quarter-on-quarter due to seasonality. The comparable operating result was 17.9 million euros (-65.2), as our continued efforts to cut costs, improve sales and optimise profits produced the desired results.
Although the challenges of our operating environment continued in the form of high fuel prices, accelerating inflation, the remaining effects of the pandemic, as well as the Ukrainian war and closed Russian airspace, there were also positive developments. Of our key markets, Japan opened to travel, and China relaxed its zero covid policy in December, which makes it possible for Chinese travel to start gradually during 2023. The impacts of the pandemic are therefore fading, and we believe that the related travel restrictions will no longer affect our operations on any of the routes we operate after the summer. We also started our cooperation with Qatar Airways by launching daily flights between Copenhagen and Stockholm and Doha from the beginning of November, and between Helsinki and Doha from mid-December. Our cooperation will significantly increase the importance of the Middle East in our network, and it will also enable smooth transfers to numerous destinations in e.g., Africa and Asia.
The implementation of our strategy to restore profitability, announced in September, continued systematically throughout the organization, and the target is to reach a comparable EBIT level of at least 5 per cent starting from mid-2024. Considering on one hand the market developing more positively than previously anticipated, and on the other hand the continued strong cost inflation, we expect the strengthening of unit revenues to play a bigger role than we previously expected in achieving our targets. Despite the economic uncertainty and weak consumer confidence, people want to travel, and strong demand is expected to continue. At the same time, we continue to manage and cut costs in all our operations. During the period, we completed the change negotiations that resulted in a reduction of 150 jobs globally. As part of our sustainable balance sheet target, we also concluded an agreement to extend the pension premium loan until 2025. The extension maintains our cash funds in the still-challenging operating environment.
During the period, we also agreed on long-term savings with some personnel groups. After the period, we reached with our Finland-based cabin crew a negotiation result that now proceeds to an administrative handling.
Despite the winter conditions that started very early, our on-time performance remained on a good level. In addition to several won awards, our wide-body aircraft cabin renewal has received very positive feedback from our customers, which has contributed to our customer satisfaction. Finnair’s Net Promoter Score of 40 remained good. Further, we received five-star status from the Airline Passenger Experience Association (APEX) based on our customers' ratings and feedback. Big thanks to the whole Finnair team for these achievements.
Finnair turns 100 years old this year. During this milestone year, our eyes are firmly on the future, and the work to restore Finnair's profitability continues. Together with the Finnair team, we are building an even stronger company for the next hundred years.
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 2022, earnings per share were -0.36 euros (-0.34). Finnair Plc’s distributable equity amounted to -291,913,121.87 euros on 31 December 2022. The Board of Directors proposes to the Annual General Meeting that no dividend be distributed for 2022.
Financial reporting in 2023
The publication dates of Finnair’s financial reports in 2023 are the following:
- Interim Report for January – March 2023 on Thursday 27 April 2023
- Half-year Report for January – June 2023 on Friday 21 July 2023
- Interim Report for January – September 2023 on Tuesday 31 October 2023
This text is a summary of Finnair's Financial Statements Release 1 January–31 December 2022. 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 15 February 2023 at 11:00 a.m. at its office at Tietotie 9. It is also possible to participate in the press conference via a live webcast at https://finnairgroup.videosync.fi/2023-0215-press.
An English-language telephone conference and webcast will begin at 1:00 p.m. Finnish time. To access the conference, kindly first register at https://palvelu.flik.fi/teleconference/?id=10010294. After the registration, you will be provided with phone numbers and a conference ID. To join the live webcast, please register at https://finnairgroup.videosync.fi/2022-q4.
For further information, please contact:
Chief Financial Officer Kristian Pullola, tel. +358 9 818 4960, kristian.pullola@finnair.com
Director, Investor Relations Erkka Salonen, tel. +358 9 818 5101, erkka.salonen@finnair.com
FINNAIR PLC
Further information:
Finnair communications, 358 9 818 4020, comms@finnair.com
Distribution:
NASDAQ OMX Helsinki
Principal media
Finnair is a network airline, specialising in connecting passenger and cargo traffic between Asia, North America and Europe. Finnair is one of the oldest operating airlines in the world, celebrating its centenary in 2023. Sustainability is at the heart of everything we do – Finnair intends to reach carbon neutrality latest by the end of 2045. Customers have chosen Finnair as the Best Airline in Northern Europe in the Skytrax Awards for 12 times in a row. Finnair is a member of the oneworld alliance. Finnair Plc’s shares are quoted on the Nasdaq Helsinki stock exchange.