22 July, 2023

Half-year report from Finnair shows revenues of over €749 million

One of the leading European outsourcing airlines Finnair has released its 2023 half-year report which shows revenue increased by 36. also2% to €749.2 million euros as the cost-cutting programme demonstrates benefits. The airline saw stronger demand with the passenger load factor up to 76.3% (67.3).

January – June 2023                                    

Revenue increased by 52.0% to 1,443.9 million euros.

The comparable operating result was 67.1 million euros (-217.1). The operating result was 74.1 million euros (-257.8).

Net cash flow from operating activities was 382.6 million euros (217.3), and net cash flow from investing activities was -331.4 million euros (-20.8).** Gross capital expenditure totalled 136.2 million euros (100.3).

The number of passengers increased by 39.8% to 5.4 million (3.9).

Available seat kilometres (ASK) increased by 20.4% to 17,763.0 million kilometres (14,756.4).

April – June 2023                                          

The comparable operating result was 66.2 million euros (-84.2). The operating result was 65.8 million euros (-92.9).

Cash funds were € 1,530.6 million euros

Net cash flow from operating activities was €175.8 million euros (182.0), and net cash flow from investing activities was -187.7 million euros (2.8).** Gross capital expenditure totalled 62.5 million euros (34.1).

The number of passengers increased by 19.4% to 2.8 million (2.4).

The passenger load factor was 75.7%.

The airline says it expects the travel demand to continue stronger than previously anticipated as more and more people have confidence in the safety of air travel. like many airlines, Finnair has seen a slight lowering of the previously excessively high fuel prices which has played a key part in the firm's performance. On top of this is the implementation of various cost-cutting measures the airline has introduced which has progressed better than anticipated.

The airline expects this year its full operating result will probably reach or even exceed the 2019 level. As a result of the improved profit outlook, Finnair’s strategic comparable operating profit margin target of at least 5 per cent from mid-2024 onwards would be reached 12–18 months earlier than anticipated. However, uncertainty in Finnair’s operating environment continues as the fuel price is still high and also since the end of the closure of Russian airspace is not in sight. In addition, the extent of the impacts of inflation and rising interest rates on demand and costs is uncertain.

The airline's CE­O, Topi Manner issued the following statement on Finnair's performance:  "The second quarter was a strong one. We carried 2.8 million customers and had a passenger load factor of 76 per cent. Our comparable operating profit was 66.2 million euros. Looking back, I’m proud of how the entire Finnair team has brought the company out of the pandemic and adapted to Russian airspace closure by defining a new strategy and implementing it successfully. 

The strong quarter was driven by continued strong travel demand and successful implementation of Finnair's strategy. We captured demand with our balanced network and were successful in our pricing and sales efforts. Also our cost control measures are bearing fruit. The net result for the period increased to 138.6 million euros, supported by the re-recognition of previously written down deferred tax assets due to clearly improved profitability and improved longer-term outlook of our business.

We introduced the new Superlight ticket type and changes to baggage allowances, and enhanced control of carry-on baggage. The changes support on-time performance and upselling, as well as add choice available for our customers. The new ticket type is part of Finnair's strategy to offer a comprehensive range of products and price points to meet the needs of different customers. In addition, we completed our strategic fleet optimisation with a long-term lease agreement for A330s with our oneworld partner Qantas. The agreement enables us to profitably deploy our A330 aircraft, whose range limits their use in Finnair's own long-haul flights in the current situation.

Customer satisfaction measured by Net Promoter Score was 35 in the second quarter, a good level in international comparison. Our on-time performance, which is a key factor in customer satisfaction, remained good at 85%, and our renewed long-haul cabins continued to receive excellent feedback from customers. In addition, our home hub, Helsinki Airport, was chosen as the best airport in Europe in its size category. Finnair was named the best airline in the Northern Europe for the 13th time in a row in a Skytrax evaluation based on customer insights.

The long tail of the pandemic was visible as capacity bottle necks in global aviation; there is a global shortage of aircraft, spare parts as well as pilots and other staff. The global capacity challenges impacted Finnair in two ways, offering opportunities to lease aircraft and crew on one hand, and prolonging the maintenance schedules of aircraft on the other hand, resulting in less than planned capacity on some routes and the cancellation of some flights from the end of the summer season.

Over the past year, Finnair has succeeded well in actively addressing the opportunities in the market. Among other things, we have made successful network choices and allocated our capacity profitably, improved sales efficiency by significantly increasing the share of direct distribution, and improved cost efficiency while maintaining our operational excellence. Due to this, also our longer-term outlook has improved, and the specific risks related to the business environment have normalised, as the impacts of the pandemic have faded, and both Finnair and the market have adapted to the closed Russian airspace. In June, we announced that we would reach our previous strategic profitability target, i.e. a comparable operating profit margin of at least 5%, 12–18 months earlier than previously estimated. We are now able to raise our strategic profitability target to 6% by the end of 2025. In addition, we intend to call our 200-million-euro hybrid bond in early September. We have also made some updates to our strategy. We are aware that our work is not done, and we continue to implement our strategy in a determined manner.    

The busiest travel weeks of the summer mean full planes and busy days at airports. I want to thank our customers for allowing us to be part of their journey also this summer. At the same time, I would like to thank our entire personnel for their excellent work and commitment to ensure smooth journeys and safe operations every day, on every flight."