In its profit warning published on 28 February, Finnair revised its financial outlook and announced that its comparable operating result in Q1 2020 was expected to be lower compared to Q1 2019, its comparable operating result would be significantly lower in Q2 2020 than in the corresponding period of 2019 and that it expected a significantly lower comparable operating result in 2020 than in the previous financial year. Further, Finnair withdrew its capacity guidance of approximately 4 per cent growth for 2020 and announced that it will adjust its network and capacity over the next months leading to a decrease in Finnair’s flight related costs, such as jet fuel, airport and other fees, in accordance with the capacity development.
In addition, Finnair announced that it was looking into adjusting its other costs by 40 – 50 million euros with measures relating to personnel, sales and marketing activities, development initiatives and other projects.
Due to the recent dramatic global impact of the coronavirus, Finnair now revises its financial outlook. Following a substantial fall in demand, Finnair will cut approximately 90 per cent of its normal capacity, compared to 2019, starting from the beginning of April 2020 and until the situation improves. This will result in a substantial comparable operating loss in the 2020 financial year.
Due to the extreme circumstances, Finnair will make further significant adjustments to its cost base.
The Board of Directors has reconsidered its dividend proposal and due to the rapid deterioration of the circumstances, the Board has concluded that the company should refrain from paying dividend. Also the government of Finland has advised the company of its intention to vote against the dividend proposal of 0.20 euros per share due to the change in circumstances. As a result, such dividend will not be distributed for 2019.
“It is now clear that the coronavirus is by far the biggest crisis in the history of aviation,” says Topi Manner, Finnair’s CEO. “The substantial deterioration of our financial outlook is fully attributable to the coronavirus. At the same time, it has nothing to do with Finnair’s underlying competitiveness, which remains intact. I would like to sincerely thank our customers for their patience and loyalty. I’m grateful, proud and constantly in awe of the dedication and team spirit our staff has shown during this extraordinary period. We will stay focused on our long-term goals and together put all of our energy in rising stronger from this situation.”
At the start of the coronavirus crisis, Finnair has a strong cash position and a healthy balance sheet. To secure the company’s future even in a prolonged coronavirus situation, Finnair is implementing a substantial funding plan. The plan includes funding instruments such as available credit lines, sale and leasebacks of unencumbered aircraft and a substantial, market-based pension premium loan. The government of Finland has confirmed to the company that it will actively support Finnair through this exceptional period.
Finnair will update its outlook in conjunction with the Q1 2020 interim report.