Finnair’s earnings growth continues: all-time high profit for Q2

April–June 2017

• Revenue increased by 11.2% year-on-year to 633.4 million euros (569.6)*.
• Available seat kilometres (ASK) grew by 6.8%.
  Comparable operating result was 37.5 million euros (3.2).
• Operating result was 89.1 million euros (0.2) including i.a. sales gain on an A350 aircraft.
• Comparable EBITDAR** was 103.2 million euros (56.3).
• Net cash flow from operating activities amounted to 162.2 million euros (119.6), and net cash flow from investing activities to -136.5 million euros (-149.0).***
• Unit revenue (RASK) increased by 4.1% year-on-year.
• Unit cost (CASK) decreased by 1.6% and unit cost at constant currency excluding fuel increased by 3.1% year-on-year.
• Ancillary and retail revenue per passenger grew by 8.2% year-on-year to 11.8 euros.
• Earnings per share were 0.50 euros (-0.04).

January–June 2017

• Revenue increased by 7.4% year-on-year to 1,187.7 million euros (1,106.0)*.
• Available seat kilometres (ASK) grew by 3.5%.
  Comparable operating result was 28.5 million euros (-12.2).
• Operating result was 79.1 million euros (-17.4).
  Comparable EBITDAR** was 153.3 million euros (92.7).
• Net cash flow from operating activities amounted to 186.1 million euros (130.0), and net cash flow from investing activities amounted to 8.6 million euros (-396.3).***
• Unit revenue (RASK) increased by 3.7% year-on-year.
• Unit cost (CASK) increased by 0.1% and unit cost at constant currency excluding fuel increased by 2.2% year-on-year.
• The 20-million euro cost-efficiency programme was completed in full by the summer.
• Ancillary and retail revenue per passenger grew by 8.7% year-on-year to 12.3 euros.
• Earnings per share were 0.41 euros (-0.19).

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

•• Comparable operating result + depreciation + lease payments for aircraft.

••• Net cash flow from investing activities includes, in the second quarter, 91 million euros of investments in money market funds and other financial assets maturing after more than three months. In the first year-half, these decreased in net terms by 95 million euros. These investments are part of the Group’s liquidity management.

Outlook

Outlook published on 28 April 2017

The demand outlook for passenger and cargo traffic in Finnair’s main markets continues to involve uncertainty. Finnair estimates that, in 2017, due to the fleet renewal and introduction of new aircraft, its capacity will grow 8–10 per cent, weighted strongly towards the second half of 2017. Revenue is expected to grow more slowly than our capacity, reflecting increasing capacity in the relevant markets.

In keeping with its disclosure policy, Finnair will issue guidance for its expected full-year operational result in connection with the half-year report in July.

Outlook on 20 July 2017

The demand outlook for passenger and cargo traffic in Finnair’s main markets continues to involve uncertainty. Finnair reiterates its previous estimate that, in 2017, due to the fleet renewal and introduction of new aircraft, its capacity will grow 8–10 per cent, weighted strongly towards the second half of 2017. Full-year revenue is expected to grow approximately in line with capacity.

At current fuel prices and exchange rates, Finnair expects its comparable operating result for 2017 to broadly double year-on-year (2016: 55 million euro)

CEO Pekka Vauramo:

Finnair is now growing at an accelerated speed: We are opening new routes, adding capacity in existing key routes, and recruiting new employees. Customer satisfaction as measured by Net Promoter Score is at an all-time high. We now provide our passengers, among other things, with wi-fi throughout the wide-body-fleet and new convenient inflight payment solutions in the entire fleet. We also launched a ground transportation service allowing the customer to purchase a complete door-to-door journey connected to a flight ticket. Our sales and marketing efforts in selected target markets are paying off, supporting our market share growth in strategic routes. Market conditions also developed favourably in the second quarter, and hence our growth, helped by successful timing, got a flying start. For the next winter season, we are planning to grow faster than ever before.

In the second quarter, Finnair carried a quarterly record number of passengers. This was also shown in our revenue, which grew at a double-digit rate. Sales grew particularly due to the solid demand for the backbone of our network, traffic between Asia and Europe, and our load factors rose. In particular, our sales developed favourably in Japan, Korea and China.

Both corporate travel and the materialisation rate of group travel have been clearly stronger than a year ago. Our new destinations, such as San Francisco, have sold well, similarly to the additional frequencies we added to Tokyo. Our expanded range of destinations and increased capacity in Europe matched the needs of our Asian and Finnish passengers. Outbound travel from Helsinki has picked up from a year ago, as has traffic from the United States to the Nordic countries and Russia due to our improved network of connections.

On the back of solid demand, our passenger load factor rose considerably in the second quarter, and ticket prices held up well. I am also pleased to see that ancillary revenue per passenger continued to increase, and the expected upturn in cargo materialised. These positive developments were also reflected in our result: our comparable operating profit in the second quarter improved by almost 35 million euros from the slightly positive result a year ago, marking nearly three years of result improvement. It was also particularly encouraging that our customer satisfaction has continued to improve: Finnair’s Net Promoter Score during the quarter was 48, an all-time high. We are focusing on service development and improving the smoothness of the entire passenger journey to offer a unique Nordic experience to our customers.

The favourable first half of the year provides a solid foundation for us to build the future Finnair. In the second half of the year, our capacity will grow at a rate of approximately 15 per cent. The third quarter is seasonally the strongest in our business, and favourable market conditions appear likely to continue. Therefore, we anticipate our comparable full-year operating profit to broadly double from last year.