Finnair Group Interim Report 1 January – 31 March 2023
Finnair Plc Interim Report 27 April 2023 at 9.00 a.m. EEST
Strong demand and well-progressed strategy implementation led to break-even result during seasonally weakest quarter.
January – March 2023
- Earnings per share were -0.01 euros (-0.15)*.
- Revenue increased by 73.8% to 694.7 million euros (399.8).
- Comparable operating result was 0.9 million euros (-132.9). Operating result was 8.3 million euros (-164.9).
- High fuel price had an adverse cost impact of c. 40 million euros** year-on-year.
- Cash funds were 1,567.8 million euros (31 Dec 2022: 1 524.4) and the equity ratio was 9.6 per cent (31 Dec 2022: 9.9).
- Net cash flow from operating activities was 206.8 million euros (35.4), and net cash flow from investing activities was -143.7 million euros (-23.7).***
- Number of passengers increased by 71.8% to 2.6 million (1.5).
- Available seat kilometres (ASK) increased by 23.6% to 8,550.2 million kilometres (6,915.2).
- Passenger load factor (PLF) was 75.1% (47.3).
* 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 Q1, net cash flow from investing activities included 63.8 million euros of investments (7.7) in money market funds or other financial assets (maturity over three months). They are part of the Group’s liquidity management.
Outlook
GUIDANCE issued 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 on 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.
NEW GUIDANCE ON 27 April 2023:
Finnair reiterates its guidance, estimating 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 on Chinese routes, and potential leases of aircraft with crew to other airlines.
Finnair estimates that the strong demand for travel will continue, supporting its unit revenues, but the continuing general economic uncertainty weakens the visibility on travel demand development after the summer season 2023. The summer months are the high season in travel, whereas demand typically weakens towards the end of the year, based on normal seasonality.
Significant uncertainty in Finnair's operating environment continues. The price of fuel is high, and the end of the Russian airspace closure is not in sight. Further, the extent of the impacts of inflation and rising interest rates on demand and costs is uncertain.
Finnair estimates that its 2023 revenue will significantly increase and comparable EBIT will significantly improve 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 and comparable EBIT will not yet reach the level of 2019.
Finnair will update its outlook and guidance in connection with the 2023 half-year report.
CEO Topi Manner:
The year started on a positive note, as Finnair achieved a marginally positive comparable operating result in the seasonally weakest first quarter. This was the third consecutive profitable quarter after ten loss-making quarters caused by the pandemic and the closure of Russian airspace. Typically, the first quarter of the year is loss-making and, thus, the result speaks of both good progress in strategy implementation, and of a strong demand environment. Strong demand, combined with capacity and resource constraints in the aviation sector caused by the pandemic, contributed to the positive development of our unit revenues.
We are heading in the right direction, but the road to recovery is a long one. We cannot expect that the current strong demand situation is a permanent one. Our operating environment remains challenging in many respects, as the fuel price has remained high, inflation has not subsided, interest rates have risen, and the Russian airspace remains closed as the war in Ukraine continues. Therefore, we are determined to continue implementing our strategy, seeking both an increase in unit revenue, and a reduction in unit costs, in order to be able to achieve our financial targets in a normalised demand and capacity environment.
Finnair now has a more geographically balanced network. Although the closure of Russian airspace has reduced traffic to Asia and travel to China is only starting to increase, Finnair's position in traffic between Europe and Asia has remained strong. At the same time, we have found new passenger flows in long-distance traffic, for example, in traffic between the United States and Europe, India and the United States, and the Middle East and Northern Europe. Brisk travel within Europe has also continued. Leisure travel has returned to the pre-pandemic level, and the recovery of business travel continues.
During the quarter, we signed a new agreement with our Finland-based cabin crew to support productivity enhancement and enable savings. As a result, almost 90 per cent of Finnair's personnel have agreed on savings to nurse the company back to health. We have also made changes to the service concept on our flights, reducing unit costs. As part of our sustainability work, we purchased the largest single batch of sustainable aviation fuel from Neste to date, 750 tonnes. While this represents only a small portion of our current fuel consumption, it is a meaningful step in our long-term journey to scale up sustainable aviation fuel usage.
Our on-time performance during the first quarter was 82 per cent. Customers have been satisfied with Finnair's service, as our net promoter score was 42. I would like to thank the entire Finnair team for their good customer care and systematic implementation of the strategy during the quarter.
We are now preparing for the busy summer season. We have strengthened our resources by recruiting pilots and hiring seasonal workers for cabin service through a partner. Thanks to our strong team and well-functioning home base Helsinki Airport, we are in an excellent position to serve our customers during the upcoming peak travel season.
Financial reporting in 2023
The publication dates of Finnair’s financial reports in 2023 are the following:
- 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 Interim Report January – March 2023. 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 27 April 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/2023-0427-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=10010295. 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/2023-q1.
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
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.