Finnair Group Interim Report 1 January

Finnair Plc Interim Report 22 October 2019 at 9.00 am (EET)

Revenue and number of passengers up, comparable operating profit down on costs, primarily driven by currencies and fuel cost**

Quarterly and full-year figures for 2018 have been restated to reflect the adoption of the IFRS 16 standard, changes in accounting principles relating to aircraft components and the changes in the presentation of profit and loss, balance sheet and cash flow statements. The restated figures were published on 21 March 2019. More information on the restatement is available in Note 20 to the Interim Report.

July–September 2019

Revenue increased by 7.9% to 870.3 million euros (806.9)*.

Unit revenue (RASK) decreased by 1.5%. Unit revenue at constant currency decreased by 2.5%.
Unit cost (CASK) increased by 2.0%. Unit cost at constant currency excluding fuel decreased by 0.8%.
Fuel costs increased by 27.4 million euros (+16.8%) of which the impact of fuel price** was 13 million euros.
Comparable operating result was 100.7 million euros (118.2). Operating result was 94.9 million euros (115.5).
Net cash flow from operating activities was 119.3 million euros (94.3), and net cash flow from investing activities was -110.3 million euros (-60.0).***

Earnings per share were 0.43 euros (0.52).
Number of passengers increased by 11.9 per cent to 4.1 million (3.7).
Available seat kilometres (ASK) grew by 9.5%.
Passenger load factor (PLF) was 86.2% (+1.7 points).

January–September 2019

Revenue increased by 7.8% to 2,336.2 million euros (2,166.2)*.
Unit revenue (RASK) decreased by 3.3%. Unit revenue at constant currency decreased by 3.7%.
Unit cost (CASK) increased by 0.1%. Unit cost at constant currency excluding fuel decreased by 2.1%.
Fuel costs increased by 80.3 million euros (+18.4%) of which the impact of fuel price** was 32 million euros.

Some exceptional increases in maintenance costs were booked in the period.
Comparable operating result was 131.7 million euros (191.9). Operating result was 125.3 million euros (183.1).
Net cash flow from operating activities was 444.4 million euros (435.3), and net cash flow from investing activities was -327.5 million euros (-151.1).***
Earnings per share were 0.32 euros (0.46).
Number of passengers increased by 10.1 per cent to 11.1 million (10.1).

Available seat kilometres (ASK) grew by 11.6%.
Passenger load factor (PLF) was 82.5% (-0.8 points).

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

** Fuel price including impact of currencies and hedging.

*** In Q3, net cash flow from investing activities includes 49.2 million euros of investments in money market funds or other financial assets maturing after more than three months. In January-September, these decreased in net terms by 6.3 million euros. These investments are part of the Group’s liquidity management.

Outlook unchanged

Guidance on 17 July 2019:

Global airline traffic is expected to continue growing in the latter half of 2019. However, the operating environment is expected to remain volatile also in the second half of the year. The slowdown in the economies of Finnair’s key markets and the continued uncertainties surrounding global trade, including the US-China trade talks and Brexit, could impact the demand for air travel and for cargo.

Finnair raises its capacity forecast for 2019 owing mainly to its new service to Beijing Daxing International Airport. Finnair estimates that capacity growth in 2019 will be between 11-12 per cent.  Revenue is expected to grow at a somewhat slower pace than capacity in 2019.

While the current outlook for Finnair’s seasonally strongest third quarter remains robust, we have started to see increased uncertainty especially in cargo demand. Finnair estimates that its comparable operating result will be between 4.5-6.0% of revenue in 2019, assuming no material changes in fuel prices and exchange rates.

CEO Topi Manner:

On the whole, Q3 developed according to the expectations we set out in our Q2 report. Finnair’s revenue increased by 7.9 per cent to 870.3 million euros and we carried 4.1 million passengers, a new record for the quarter. Our European traffic performed strongly both in terms of growth and yields, and new North American route to Los Angeles has been well-received. In selected Asian routes, most notably Hong Kong, lower demand was experienced. All in all, Finnair’s market share growth continued across traffic categories.

Cargo revenue was impacted by weaker demand across the industry, which also compressed yields in the cargo market significantly; however, Finnair’s market share in cargo continued to grow slightly. The demand for travel services picked up in Q3 after a challenging first half of the year, signalling more positive development for the rest of the year.

Our comparable operating profit fell short versus the comparison period and totalled 100.7 million euros in Q3. In addition to cargo, the year-on-year increase in jet fuel price paid (incl. hedging), a decline in the dollar-based discount rate on maintenance reserves and negative exchange rate effects compressed our profitability.

We also continued to renew our distribution strategy. Our new distribution model and partnerships, which utilise new distribution capabilities with full-content agreements, went live in early October. It will be, together with our redesigned Finnair.com website, key to driving better customer experience and revenue development.

We see a shift in operating environment where global uncertainties have translated into slower economic growth. In this environment we will pay more focus on value creating growth and cost efficiency. On-time performance, fuel efficiency and automation of processes are examples of this agenda. We will elaborate on this in the upcoming Capital Markets Day on 12th November.

Financial Reporting in 2020

The publication dates of Finnair’s financial reports in 2020 are the following:

Financial Statements Bulletin for 2019 on Friday 7 February 2020

Interim Report for January–March 2020 on Wednesday 29 April 2020
Half-Year Report for January–June 2020 on Friday 17 July 2020
Interim Report for January–September 2020 on Wednesday 28 October 2020

FINNAIR PLC
Board of Directors

Briefings

Finnair will hold a results press conference (in Finnish) on 22 October 2019 at 11:00 a.m. at its office located at Tietotie 9, Vantaa.

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 9 7479 0361 (Finland), 0200 880 389 (Sweden), 0800 358 6377 (UK) or +44 (0)330 336 9105 (all other countries). The confirmation code is 7032340. To join the live webcast, please register at: https://slideassist.webcasts.com/starthere.jsp?ei=1267168