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Finnair Group Ends 2023 With Strong Financials As Market Grows

Finnair Group’s 2023 financial summary reflects steady resilience in 2023, benefiting from a dynamic market and strategic revenue and cost initiatives. Let’s dive into the details of the airline’s year-end financial release.

Finnair Crew on the runway with a Finnair A350
Finnair Crew on the runway with a Finnair A350. Source: Finnair

Finnair Financial Performance Q4: October – December 2023                             

  • Revenue showed a rise of 5.8%, reaching €727.2 million.
  • Operating income before exceptional items climbed to €22.5 million from last year’s €17.9 million.
  • Operational profit decreased, posting €27.3 million compared to the previous €38.0 million.
  • Earnings per share dropped slightly to €0.004 from the previous €0.005.
  • Extraordinary deferred tax gains of €46 million were recorded, attributed to tax losses carried forward from previous years.
  • Cash reserves fell to €922.0 million from €1,524.4 million, largely due to a substantial pension premium loan repayment and aircraft purchase.
  • The equity ratio improved, rising from 9.9% to 15.6%.
  • Operating activities resulted in a negative cash flow of €5.7 million, a drop from the positive €29.9 million observed earlier.
  • Investing activities showed a substantially increased outflow, with a negative cash flow of €177.7 million compared to the former outlay of €54.3 million.
  • Capital investments were up significantly, totaling €268.6 million, up from €61.8 million.
  • Passenger numbers experienced growth, with a 6.5% increase to 2.6 million passengers.
  • The available seat kilometers (ASK) saw a 10.5% boost, reaching over 9 billion kilometers.
  • The passenger load factor (PLF) improved marginally by 0.8%, settling at 73.1%.

Finnair Financial Performance January – December 2023                             

  • Revenue Growth: The company’s revenue saw a significant increase of 26.8%, reaching €2,988.5 million, compared to €2,356.6 million in the previous year.
  • Operating Results:

    • The comparable operating result stood at €184.0 million, which shows an improvement from a loss of €163.9 million last year.
    • The operating result improved to €191.4 million from a loss of €200.6 million.
  • Earnings Per Share: Earnings per share were at €0.022, a positive shift from a loss of €0.060 last period.
  • Tax Items Impact: The results included a one-time gain of €145 million due to deferred tax assets recognized from previous years’ tax losses.
  • Cash Flow:

    • The net cash flow from operating activities increased to €472.3 million, up from €259.0 million.
    • Net cash from investing activities was significant at -€464.0 million, much higher than the last period’s -€75.5 million due to increased investments and redemptions.
  • Capital Expenditure: There was a large increase in gross capital expenditure, which totaled €484.2 million, compared to €199.6 million in the prior period.
  • Passenger Growth: The number of passengers rose by 20.8%, going from 9.1 million to 11.0 million.
  • Flight Capacity: Available seat kilometers (ASK) saw a 15.5% increase to 36,154.5 million kilometers. This level is about 77% of the ASKs in 2019, reaching roughly 81% when including wet leases.
  • Passenger Load: The passenger load factor (PLF) improved to 76.4% from 67.6%.
  • Dividend: The Board of Directors decided not to distribute dividends for 2023.

Note: Figures in parentheses () refer to the previous year’s same period. After a rights issue in November 2023, some figures have been restated for a fair comparison. Q4 investment activities included money market funds and financial assets redemptions. Total investments in 2023 amounted to €60.7 million.

Finnair Financial Outlook

Guidance Issued 24 October 2023:

Finnair is set to boost its 2023 flight operations, aiming to reach 80–85% of its pre-pandemic levels. By measuring Available Seat Kilometers (ASKs), they’re confident in their growth, including their current wet lease agreements.

The airline has refined its revenue projections for the full year, anticipating a 2.9–3.1 billion euros turnover.

Regarding their 2023 operating profits, Finnair now predicts a range of 160–200 million euros. This updated forecast relies on the present fuel costs and currency exchange rates.

As the world moves past the pandemic, Finnair notices a stabilization in its operational risks. Yet, concerns over inflation and interest rate hikes creating pressure on expenses and customer demand remain. The ongoing tensions in the Middle East also contribute to this uncertainty.

New Finnair Guidance Issued 14 February 2024:

Expectations are high for global air traffic to see growth in 2024. Yet, we face significant challenges due to ongoing inflation and rising interest rates that may dampen demand and increase costs. International conflicts and widespread political instability further cloud the horizon, potentially impacting people’s travel choices and freight movement.

Amid this, Finnair has set ambitious targets to boost its capacity by over 10% in 2024, with an expansion plan focused on Asia and Europe. By integrating wet leases into their strategy, they aim to support this growth. Although capacity is set to rise sharply, Finnair anticipates its revenue gains to trail behind slightly.

Finnair sticks to a strict disclosure policy. The airline will reveal a comprehensive EBIT forecast for the entire year alongside its mid-year report in July.

Finnair will publish a financial outlook and offer updated guidance with the release of its first-quarter interim report for 2024.

Comments from Interim CE­O Jaakko Schildt on Finnair Financial Report: 

Finnair Operating Performance

Finnair carried 2.6 million passengers in October–December, and revenue for the period totaled 727.2 million euros (687.3). The comparable operating result was 22.5 million euros (17.9), which means that our continued cost efficiency and sales activities generated good results, supported by a favorable market. Finnair’s comparable operating result was positive for the sixth quarter, and net profit for the fifth quarter in a row.

Despite the challenging weather conditions during the period, the on-time performance of our flights remained at a reasonable level of 75 percent. Unlike many other airlines, we were able to operate almost all our flights despite some delays. Our regularity has been top-class in global comparison, both during the period and throughout the year. This has supported customer satisfaction, and our Net Promoter Score (NPS) was 32 in the fourth quarter, which is a good level internationally.

Rights Issue 570m Euros

During the period, we successfully carried out a rights issue of 570 million euros, a significant step of our strategy implementation. The proceeds from the rights issue were used to strengthen Finnair’s balance sheet and financial position to better manage our financial liabilities, support the implementation of our strategy for sustainable profitable growth, and ensure our ability to invest in the future. I would like to extend my warmest thanks to all old and new shareholders who participated in our rights issue.

After the rights issue, we repaid, among other things, the remaining tranche of the 400-million-euro capital loan granted by the State of Finland. After that, Finnair no longer has debt instruments deemed as equity. We also repaid an additional 120-million-euro tranche on our 600-million-euro pension premium loan. Thanks to these measures, as well as our strong full-year results and cash flow, our balance sheet is healthier than before, and our financial expenses have  decreased. 

Strategy Implementation

Our strategy implementation continued comprehensively during the period. Among other things, we started our cooperation with our oneworld partner Qantas by wet leasing two A330 aircraft for operations between Australia and Southeast Asia. This is another important step towards ensuring the efficient and profitable use of our fleet while Russian airspace remains closed.

Finnair celebrated its 100th anniversary on 1 November. Our anniversary year was filled with celebrations, but most importantly, it was a year of turnaround, as we left behind a double crisis. Our systematic strategy work carried out since autumn 2022 has borne fruit, and we have returned our business operations to the targeted profitability level on an annual level. 

We will continue to implement our strategy and, in addition to profitability, take care of operational quality, reliability and, consequently, customer satisfaction. My thanks for the successful anniversary year and for achieving Finnair’s turnaround goes to the entire Finnair personnel. Thank you also to our customers and all stakeholders for the journey together.

Shareholder Returns: Finnair Board Recommends No Dividends for 2023

Finnair’s policy is to return roughly one-third of earnings per share (EPS) as dividends or capital distributions over an economic cycle, considering factors like earnings, financial health, and capital needs. After a rights issue in November, Finnair plans to recommence shareholder distributions beginning in 2025. For 2023, the EPS was 0.022 euros, and the company’s distributable equity stood at over 473 million euros. However, the Board suggests no dividends be distributed for 2023.

Finnair Financial Reporting Schedule for 2024

The publication dates of Finnair’s financial reports in 2024 are the following:

  • Interim Report for January–March 2024 on Tuesday 23 April 2024
  • Half-year Report for January–June 2024 on Friday 19 July 2024
  • Interim Report for January–September 2024 on Tuesday 29 October 2024

Finnair Financial Report 2023

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