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Finnair: Strikes Hurt Q1 Revenue & Result

Finnair reports on Q1 yields and operating cash flow remained good. Strikes hurt revenue and result.

Finnair has published its Q1 results, showing slightly lower passenger numbers and a drop in load factor from January through March of this year. The airline reports positive yields and operating cash flow but indicates that strikes harmed its revenue and results.

Finnair Airbus A330
Finnair Airbus A330

In Brief: Finnair Q1 Results January – March 2024                                   

  • Revenue decreased by 1.9% to 681.5 million euros (694.7*). 
  • Unit cost (CASK) decreased by 4.3 percent, totaling 7.77 cents (8.11).
  • The comparable operating result was -11.6 million euros (0.9), and the operating result was -17.2 million euros (8.3). 
  • Earnings per share were -0.15 euros (-0.09**). 
  • The cash funds were 981.0 million euros (31 Dec 2023: 922.0), and the equity ratio was 15.3 percent (31 Dec 2023: 15.6).
  • Net cash flow from operating activities was 138.9 million euros (206.8), and net cash flow from investing activities was -25.9 million euros (-143.7).*** Gross capital expenditure totaled 43.4 million euros (80.0).
  • The passenger numbers decreased by 1.9 percent to 2.5 million (2.6).
  • Available seat kilometers (ASK) increased by 4.4 percent to 8,922.9 million kilometers (8,550.2).  When wet leases are included, ASKs rose by 3.5 percent.
  • Passenger load factor (PLF) decreased to 72.1 percent (75.1). 

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

**  A rights issue was implemented in November 2023. Thus, the comparison period figure has been restated accordingly. On 20 March 2024, Finnair executed a reverse split, i.e. reducing the number of shares where every 100 old shares in the company corresponds to one new share.

*** In Q1, net cash flow from investing activities included 6.5 million euros of redemptions (63.8 million euros on investments) in money market funds or other financial assets (maturity over three months). These redemptions are part of the Group’s liquidity management.

Finnair Outlook

Guidance Issued on 14 February 2024:

Global air traffic is anticipated to grow in 2024, but inflation, interest rates, international conflicts, and political instability remain uncertain. Despite these challenges, Finnair plans to expand its capacity by over 10%, focusing on Asia and Europe, although its revenue growth might lag behind this capacity increase. Finnair will offer a comprehensive earnings estimate in July with the half-year report and will provide updates in its Q1 2024 interim report.

New Guidance on 23 April 2024:

Despite the growing global air traffic anticipated in 2024, Finnair faces uncertainties due to inflation, interest rates, international conflicts, and global political instability. These factors might impact air travel and cargo demand. Finnair has adjusted its guidance, aiming to boost its capacity by approximately 10 percent, particularly in Asia and Europe, a slight decrease from their initial plan of more than 10 percent growth. As a result, the company expects revenue to increase slower than capacity.

Finnair will present detailed financial projections in its half-year report in July, including a full-year comparable EBIT estimate. The airline will update its outlook and guidance with the 2024 half-year report.

Comments From Finnair Interim CE­O Jaakko Schildt: 

Finnair carried 2.5 million passengers in January–March, and revenue for the period totaled 681.5 million euros (694.7). The revenue decrease was driven by the political strikes in Finland, normalized revenue recognition related to expired tickets, and lower cargo yields, despite higher ancillary and travel services revenue. On the other hand, operating expenses remained unchanged year-on-year due to a strict cost control and a lower fuel price even though capacity increased. Comparable operating result in the seasonally weakest quarter was -11.6 million euros (0.9). 

Demand remained good in the quarter and customers booked trips especially for the upcoming summer season. As a result of the successful pricing, our yields remained strong despite a slight decrease year-on-year. Also our operating cash flow was at a good level.

The strikes in Finland and in Europe negatively affected our on-time performance during the quarter. Our on-time performance was also burdened by winter weather conditions, landing at 75 percent (82).

A new era started in our Finnair Plus loyalty program when it became spend-based, and we adopted Avios as our loyalty currency. The ticket type changes carried out last summer have yielded results that are visible in our customer satisfaction, on-time performance and ancillary revenue figures. Our Net Promoter Score (NPS) measuring customer satisfaction remained at a good level at 34.

During the first quarter, our contribution to solving the climate challenge of aviation took an important step forward as we submitted our new climate target for validation to Science Based Targets initiative (SBTi).  Finnair’s target is to reduce the emissions intensity from the aircraft we fly by 34.5 per cent through 2033 compared to 2023 baseline.

Finnair’s Annual General Meeting resolved on a reverse split in March. After the reverse split, every 100 old shares corresponds to one new share. The aim of the reverse split was to facilitate trading conditions and improve the price formation of the shares.

At the end of March, four A320 aircraft returned from wet lease outs to British Airways. At the same time, one of our A330 aircraft moved to operate Qantas flights between Bangkok and Sydney based on a wet lease agreement.

The entire Finnair personnel is preparing for the seasonally busiest traveling period ahead. We have recruited summer workers especially in Finnair Kitchen and in airport customer service operations. The pilot and cabin crew recruitments done in 2023 also support operations in the summer. Our network includes 15 long-haul and almost 70 European destinations, with Wroclaw in Poland as the latest addition. I believe our strong offering matches well to the needs of our customers. Our committed personnel, together with our partners, takes care of a safe, smooth, and pleasant customer experience.

Finnair Group Interim Report

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