Finnair Oyj - Interim report (Q1 and Q3)

Finnair Group Interim Report 1 January–31 March 2017

Tenth consecutive quarterly improvement; comparable operating loss almost halved
in a seasonally challenging quarter

January–March 2017

  ·  Revenue increased by 3.3% year-on-year to 554.4 million euros (536.4)*.
  ·  Available seat kilometres (ASK) grew by 0.1%.
  ·  Comparable operating result was -9.0 million euros (-15.3).
  ·  Operating result was -10.0 million euros (-17.6).
  ·  Comparable EBITDAR** was 50.1 million euros (36.4).
  ·  Net cash flow from operating activities totalled 23.9 million euros (10.4),
and net cash flow from investing activities amounted to 145.1 million euros (
-247.3).***
  ·  Unit revenue (RASK) increased by 3.3% year-on-year.
  ·  Unit cost (CASK) increased by 2.0% and unit cost at constant currency
excluding fuel increased by 1.2% year-on-year.
  ·  The 20-million euro cost-efficiency programme will be completed in full by
the summer.
  ·  Ancillary and retail revenue per passenger grew by 9.4% year-on-year to
13.0 euros.
  ·  Earnings per share were -0.09 euros (-0.15).
  ·  Outlook unchanged: Finnair estimates that, in 2017, its capacity will grow
8–10%, weighted towards the second half of 2017. Revenue is expected to grow
more slowly than capacity, reflecting both the increasing capacity in the
markets Finnair serves in addition to Finnair's efforts to increase ancillary
revenue.

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

** Operational result + depreciation + lease payments for aircraft.

*** Net cash flow from investing activities includes 186 million euro
investments in money market funds and other financial assets maturing after more
than three months. These investments are part of the Group’s liquidity
management.

Outlook

The demand outlook for passenger and cargo traffic in Finnair’s main markets
continues to involve uncertainty. Finnair estimates that, in 2017, due to the
fleet renewal and introduction of new aircraft, its capacity will grow 8–10 per
cent, weighted strongly towards the second half of 2017. Revenue is expected to
grow more slowly than our capacity, reflecting increasing capacity in the
relevant markets.

In keeping with its disclosure policy, Finnair will issue guidance for its
expected full-year operational result in connection with the half-year report in
July.

CEO Pekka Vauramo:

Revenue grew in particular due to solid demand for Asian and Domestic flights.
The passenger load factor rose and ancillary revenue per passenger also
continued to increase. Our comparable operating result improved six million
euros from the previous year. Hence, our result has now been on an upward trend
for ten consecutive quarters.

Mid-winter is traditionally a weak period for Finnair due to seasonality, but we
saw several positive signs during the quarter: the demand for travel to Europe
seems to have stabilised, and sales in our key markets of China and Korea
increased from the previous year. Our Asian flights were almost full during the
quarter, with broadly unchanged average ticket prices. An increasing share of
our Chinese passengers also continued their journey from Helsinki to our
destinations in Finnish Lapland, and we carried some 40,000 more passengers on
our domestic flights than a year earlier. For next winter, we are aiming to
increase our capacity to Finnish Lapland even more. If our Lapland strategy
continues to succeed, it will help to balance the seasonality of our business.

Strike actions by third parties at our Helsinki hub impacted our operations in
March. We were forced to prepare for the strikes through various measures, and
cancelled a large proportion of our flights on two separate days. We were able
to contain the losses at approximately three million euros.

We achieved major milestones in our growth preparations. During the quarter, we
took delivery of two A321 narrow-body aircraft and immediately after the period
one new A350, which will increase our capacity quite significantly. Furthermore,
we recently received our own A350 flight simulator, which has had an immediate,
material impact on the efficiency of our pilot training program. In late spring,
we will also receive a new narrow-body simulator, which will make us self
-sufficient in terms of training. In addition, we now have new long-term
collective labour agreements with our flying personnel groups, which improve the
flexibility and of our operations in addition to allowing more planning
efficiency and visibility. In-flight meal services were returned to Finnair’s
control in April, and we are immediately taking development measures to serve
our passengers better in this area, too.

Our accelerated growth is about to start. Our fleet is getting larger, personnel
are increasing, and we are opening new routes and frequencies. This summer will
be busier than ever. Finnair will fly to Asia 87 times a week. More and more of
our routes will be operated with larger aircraft. We expect to reach 40,000
daily passengers at Helsinki Airport during this quarter. The launch of the new
terminal wing at our hub in the summer will smooth our passenger journeys and
improve the customer experience.

Financial reporting

The publication dates of Finnair’s financial reports in 2017 are as follows:


Half-Year Report 1 January – 30 June 2017:                               20 July
2017

Interim Report 1 January – 31 September 2017:                         25 October
2017

FINNAIR PLC
Board of Directors

Briefings

Finnair will hold a result press conference on 28 April 2017 at 11:00 a.m. and
an analyst briefing at 12:30 p.m. at its office at Tietotie 9. An English
-language telephone conference and webcast will begin at 2:30 p.m. Finnish time.
The conference may be attended by dialling your local access number 09 7479 0362
(Finland), 0200 880 389 (Sweden), 0800 279 6839 (UK) or +44 330 336 9105 (all
other countries). The confirmation code is 3476429. To join the live webcast,
please register at: https://slideassist.webcasts.com/starthere.jsp?ei=1143128

For further information, please contact:

Chief Financial Officer Pekka Vähähyyppä, tel. +358 9 818 8550,
pekka.vahahyyppa@finnair.com

Financial Communications Manager Ilkka Korhonen, tel. +358 9 818 4705,
ilkka.korhonen@finnair.com

IRO Kati Kaksonen, tel. +358 9 818 2780, kati.kaksonen@finnair.com
FINNAIR PLC
Further information:
Finnair communications, 358 9 818 4020, comms(a)finnair.com

Distribution:
NASDAQ OMX Helsinki
Principal media
Finnair is a network airline specialising in passenger and cargo traffic between
Asia and Europe. Helsinki’s geographical location gives Finnair a competitive
advantage, since the fastest connections between many European destinations and
Asian megacities fly over Finland. Finnair’s vision is to offer its passengers a
unique Nordic experience, and its mission is to offer the smoothest, fastest
connections in the northern hemisphere via Helsinki and the best network to the
world from its home markets. Finnair is the only Nordic carrier with a 4-star
Skytrax ranking and a member of the oneworld alliance. In 2016, Finnair’s
revenues amounted to EUR 2,317 million and it carried almost 11 million
passengers. Finnair Plc’s shares are quoted on Nasdaq Helsinki.

Attachments:

04275811.pdf