Finnair Group Interim Report 1 January – 30 September 2021

Tue, Oct 26, 2021 08:00 CET

Finnair Plc Interim Report 26 October 2021 at 9.00 a.m. EEST

Travel restarted in Europe – half of Finnair markets are open. Operating cash flow turned positive for the first time since Q4 2019.

July – September 2021

Earnings per share were -0.08 euros (-0.15)*.
Revenue increased by 104.7% to 199.4 million euros (97.4).
Comparable operating result was -109.1 million euros (-167.0). Operating result was -106.0 million euros (-183.1).
Cash funds were 1,181.4 million euros (31 Dec 2020: 823.7) and equity ratio was 14.1 per cent (31 Dec 2020: 24.6).
Net cash flow from operating activities was 27.1 million euros (-267.3), and net cash flow from investing activities was 357.4 million euros (21.6).**
Number of passengers increased by 71.6% to 0.8 million (0.5).
Available seat kilometres (ASK) increased by 97.6%.
Passenger load factor (PLF) was 41.6% (38.7).

January – September 2021

Earnings per share were -0.28 euros (-0.56).
Revenue decreased by 41.6% to 424.9 million euros (727.2).
Comparable operating result was -403.6 million euros (-432.4). Operating result was -394.2 million euros (-449.9).
Net cash flow from operating activities was -149.8 million euros (-864.5), and net cash flow from investing activities was 376.4 million euros (216.4).**
Number of passengers decreased by 58.6% to 1.3 million (3.2).
ASK declined by 49.4%.
PLF was 35.7% (66.6).

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

** In Q3, net cash flow from investing activities includes 26.3 million euros of investments (11.3 million euros of redemptions) in money market funds or other financial assets (maturity over three months). In Q1-Q3, the redemptions, however, totalled in net terms to 11.7 million euros (382.6). They are part of the Group’s liquidity management.

Outlook

guidance issued on 15 JUly 2021:

Travel restrictions have been lifted at a slower pace than expected and, therefore, the recovery in demand has also been delayed. We expect that demand will increase gradually during the fall 2021 as now Finland is also opening to travel. The company estimates that the monthly operating cash flow will turn positive by the end of the year 2021.

The travel restrictions will, however, continue to have a softening impact on demand especially in Asia, which is expected to open to travelers some months later than Europe. Due to the travel restrictions and incremental costs caused by the increased capacity, the comparable operating loss in Q3 2021 will be of a similar magnitude as in the five previous quarters despite the gradual increase in revenue.

As a result of the pandemic situation, inclusive of virus variants, visibility remains weak and there are several scenarios of the timing of the recovery and, thus, the company will not provide guidance on full year 2021 revenue.

Finnair will update its outlook and guidance in connection with the Q3 2021 interim report.

NEW GUIDANCE 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.

CEO Topi Manner:

The negative impact of the pandemic continued in the third quarter, and our passenger numbers and revenue remained considerably below the pre-pandemic levels. Our result was still heavily negative.

Restrictions on travel between Finland and the rest of Europe were finally lifted in late July, much later than travel restrictions in the rest of Europe. Pent-up demand and the increase in vaccination coverage began to be positively reflected in bookings, especially from September onwards. Nevertheless, we are still far from the pre-pandemic passenger numbers. Our main market Asia continues to be largely closed to international travel, and the United States will not open before 8 November. Only approximately half of our markets are, thus, open for travel, which is clearly less than for many other European airlines.

Air cargo demand was exceptionally strong, especially at the end of the reporting period, due to global supply chain issues. Finnair Cargo achieved record revenues and enabled us to further increase the number of passenger flights to our long-haul destinations in Asia and the United States. We expect the strong cargo demand to continue at least until the end of the year.

Thanks to the improved booking situation and strong cargo operations, our operating cash flow for the third quarter turned positive for the first time since the fourth quarter of 2019.

We continued our financing measures and completed a sale and leaseback arrangement of four A350 aircraft, using the related proceeds of more than 400 million USD to strengthen our cash reserves with a view to future loan repayments. During the pandemic, we have raised approximately 3 billion euros of new financing. Our cash position is strong. This enables us to focus on the ramp-up of our traffic.

Early November will see significant development as Thailand and the United States are opening for quarantine-free travel as our first long-haul markets. Importantly, we have also seen positive steps towards the opening of Asia-Pacific, with Singapore and Australia now allowing international travel in addition to Thailand. We estimate that South Korea and Japan will follow within a few months due to their improved vaccination coverage. China is likely to open only after the first half of 2022. We continue to closely monitor the development of travel restrictions and demand and are adding capacity to both Europe and our long-haul destinations during the winter season when the situation warrants.

We have started normalising the customer experience, reopening amenities such as our lounges at Helsinki Airport. We restarted in-flight sales, at the same time renewing our in-flight service concept to focus more on pre-order which gives more customer choice and helps to reduce food waste and aircraft weight. Health and safety measures, such as the usage of masks onboard, will continue on our flights. Our customer satisfaction remained at an excellent level. This was reflected in customers voting Finnair the best airline in the Northern Europe for the 11th consecutive time in the Skytrax World Airline Awards.

As traffic increases, we have been able to call more employees back to work from furlough, which makes us all happy. We are also preparing to launch our new direct service from Stockholm to the United States and Thailand, a major new initiative for Finnair. Together with the entire Finnair team, I welcome our customers to our flights. We are waiting for you at the departure gate.

Financial reporting in 2022

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

Financial Statements Bulletin for 2021 on Thursday 17 February 2022
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 Interim Report January – September 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 26 October 2021 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/2021-1026-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 11610691#. To join the live webcast, please register at https://finnairgroup.videosync.fi/2021-q3.

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

FINNAIR PLC

Further information:
Finnair communications, 358 9 818 4020, comms@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.