2011-10-27 08:30:00 CEST
2011-10-27 08:30:11 CEST
REGULATED INFORMATION
Finnair Oyj - Interim report (Q1 and Q3)
FINNAIR GROUP INTERIM REPORT JANUARY 1-SEPTEMBER 30, 2011
Third quarter turnover up 10.1%, operational result 27.6 million euros
Finnair Plc Stock Exchange Release 27 October 2011 AT 09:30
The first steps taken in the structural change during the profitable third
quarter
Key figures
----------- July-Se July-Se Change Jan - Jan - Change
pt 2011 pt 2010 % Sept Sept %
2011 2010
--------------------------------------------------------------------------------
Turnover and result
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Turnover EUR 607.2 551.4 10.1 1 680.3 1 506.4 11.5
milli
on
Operational result, EUR 27.6 41.9 -34.1 -29.3 2.0
EBIT* milli
on
Operational result, % 4.5 7.6 -1.8 0.1
%of turnover
Operating result, EUR 10.6 50.6 -79.1 -57.7 -8.6
EBIT milli
on
EBITDAR EUR 75.8 86.1 -12.0 113.2 138.6 -18.3
milli
on
Result before taxes EUR 3.1 43.9 -92.9 -73.3 -23.4
milli
on
Net result EUR 1.9 32.4 -94.1 -54.9 -17.1
milli
on
--------------------------------------------------------------------------------
Balance sheet and
cash flow
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Equity ratio % 33.1 34.0
Gearing % 41.9 33.5
Adjusted gearing % 101.4 90.0
Capital expenditure, EUR 121.0 12.9 182.8 156.4
CAPEX milli
on
Return on capital % -3.4 -2.9
employed, ROCE,
12 months rolling
Return on equity, % -7.5 6.4
ROE,
12 months rolling
Net cash flow from EUR -5.7 46.8 46,4 48.4
operating milli
activities on
--------------------------------------------------------------------------------
Share
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Share price at end EUR 2.94 4.95 2.94 4.95
of quarter
Earnings per share EUR 0.00 -0.24 -0.48 -0.18
--------------------------------------------------------------------------------
Traffic data, unit
costs and revenue
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Passengers 1,000 2 174 1 960 11.0 6 100 5 479 11.3
Available seat millio 7 553 6 612 14.2 22 057 19 082 15.6
kilometres, ASK n
Revenue passenger millio 5 849 5 194 12.6 16 305 14 781 10.3
kilometres, RPK n
Passenger load % 77.4 78.5 -1.1 73.9 77.5 -3.5
factor, PLF
Unit revenue per cents/ 6.4 6.7 -4.3 6.0 6.2 -3.3
available seat ASK
kilometre, RASK
Unit revenue per cents/ 7.4 7.5 -1.9 7.2 7.03 2.0
revenue passenger RPK
kilometre, yield
Unit cost per cents/ 6.2 6.3 -1.3 6.3 6.5 -2.9
available seat ASK
kilometre, CASK
CASK excluding fuel cents/ 4.5 4.6 -3.5 4.6 4.9 -5.9 ASK
Available tonne millio 1 196 1 020 17.3 3 420 2 848 20.1
kilometres, ATK n
Revenue tonne millio 769 679 13.3 2 125 1 865 14.0
kilometres, RTK n
Cargo and mail tonnes 39 286 34 891 12.6 107 852 89 426 20.6
Cargo traffic unit cents/ 26.3 25.6 3.1 26.7 25.5 4.8
revenue per tonne RTK
kilometre
Overall load factor % 64.4 66.6 62.1 65.5 -3.3
Flights 1 19 764 19 575 1.0 60 595 56 616 7.0
--------------------------------------------------------------------------------
Personnel
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Average number of 7 514 7 608 -1.2
employees
*Operational result: Operating result (EBIT), excluding non-recurring items,
capital gains and changes in the fair value of derivatives and in the value of
foreign currency denominated fleet maintenance reserves
Finnair CEO Mika Vehviläinen on Q3 2011:
We achieved a positive result in the seasonally strong third quarter, with
operational profit totalling 27.6 million euros and our balance sheet is still
strong. Even though this year has been a difficult one for us, there was still
some positive news in the review period. In August, authorities approved Flybe
Nordic's acquisition of Finnish Commuter Airlines. I firmly believe that this
associated undertaking has good potential of becoming the leading company in
regional aviation in the Nordic countries and the Baltic States. In the future,
it will not only increase local travel but also boost passenger streams for our
Asian and European feeder traffic. Our corporate sales have also continued its
positive development and I am especially pleased that the Asian corporate sales
reached almost 50% growth year-on-year.
Customer satisfaction has further improved and the American Travel + Leisure
magazine ranked Finnair among the top 12 airlines in the world when it comes to
quality of service. The efforts devoted to the development of our customer
service identity during the past year are beginning to bear fruit, for which
our personnel deserves special thanks.
The Singapore route, launched in May, has been well received, and we can be
pleased with the first few months of this new route. We have reviewed our route
network with a critical eye and made route-specific changes to our winter
season flight selection. We will continue the assessment of our network in
order to maximise its efficiency.
Nevertheless, we cannot be satisfied with the third quarter results, especially
because - as we have stated before - that the last quarter of the year will not
be profitable. Therefore, the structural change and cost saving measures that
we announced in August are absolutely necessary. We have systematically gone
through all of our cost items and assessed the areas where we could cut costs
without jeopardizing the future of our business. We have already begun taking
measures in areas where it is possible to make savings quickly. For more
extensive savings, we will discuss with employee representatives and analyse
various alternative ways of carrying out the structural changes required to
achieve these savings.
We estimate that we will achieve this year a smallish part of our target of
reducing annual costs by 140 million euros, while the most substantial progress
will take place in 2012, with some measures still to be taken in 2013. In
September, we announced our plan to cut costs both in the company's support
functions as well as in marketing and distribution. At the same time, we also
initiated appropriate employee consultations. In addition, we have announced
that we are investigating partnership opportunities in Catering and Technical
Services and conducting negotiations with Swissport about the transfer of
baggage and apron services at the Helsinki-Vantaa airport to them. We will
certainly be able to provide more information about these and other plans as
investigations and planning proceed.
Changes are needed also because of the current uncertainty in the global
economy. After the European holiday season, business travel has not taken off
in line with our earlier expectations, and in cargo traffic, the load factor
has declined due to overcapacity in the industry. In addition there are some
indications that the global economy has also started to have an impact on the
Asian demand. Travel Services suffered from overcapacity in the industry, and
consequently the Aurinkomatkat-Suntours continued to report a heavy loss. In
addition, the price of oil has remained at an exceptionally high leveldespite
the weakened economic outlook. Traditionally the price of oil has decreased as
the economic outlook weakens. Accordingly, we updated our outlook for the
second half of the year in early October to be more pessimistic.
The state of global economy will shake the competitive positions in the
industry as well as the viability of airlines in an unprecedented manner.
Therefore, it is clear that we must implement the measures to improve our
profitability as soon as possible.
We are committed to making structural changes and developing Finnair to make it
even stronger as it faces future competitive challenges.
Business environment and development of Finnair's flight operations
In the third quarter, growth in turnover slowed down due to increasing
uncertainty in the global economy. Year-on-year, Finnair's turnover increased
by 55.8 million euros to 607.2 million euros. Revenue from Asian traffic grew
by 22.6% year-on-year. Despite the economic slowdown, the price of fuel has
remained high, which has weakened the profitability.The increasing
macroeconomic uncertainty can be seen in the weaker than anticipated
development of business travel pre-bookings. Also the profitability of
Finnair's cargo traffic declined due to a decline in load factors and cargo
demand, and Aurinkomatkat-Suntours, Finnair's tour operator subsidiary,
continued to suffer from overcapacity in the industry. On October 6, 2011
Finnair updated its outlook for the second half of 2011 and estimated that it
will not reach profitability in the second half of the year, contrary to its
earlier expectations.
Finnair's profitability declined and its operational result was 27.6 million
euros, compared with 41.9 million euros in the corresponding period of the
previous year. Due to improvements in operational efficiency, operating costs
excluding fuel were in line with expectations, at 439.9 million euros (397.2).
Unit costs, excluding fuel, fell by 3.5% compared with the previous year. Fuel
hedging gains were 21 million euros in July-September. According to the Finnair
hedging policy, the degree of hedging in October-December is 79%.
Progress in the cost saving and structural change programme
The cost saving and structural change programme, announced in connection with
the second-quarter interim report in August 2011, has proceeded as planned. The
programme encompasses all functions of the company, and key areas in focus are
organisation, fleet, IT, crew, maintenance, sales and distribution and airport
operations costs.
The company's plan to streamline its administration and increase the efficiency
of its marketing and distribution activities was announced August 29, 2011, and
employee consultations have been initiated in Finance, HR, IT and marketing
organizations of the airline business. The estimated workforce reduction need
in these functions is approximately 155 positions in aggregate. In addition,
Finnair aims to significantly improve the cost efficiency of its IT,
procurement, distribution and marketing activities and decrease their spending.
Finnair has started negotiations to transfer baggage and apron services to
Swissport, a Swiss company specializing in these operations. Furthermore, the
company aims to renegotiate aircraft leasing agreements which are about to
expire align them with the current leasing market situation. The company is
also evaluating the optimum size of its fleet in European air traffic. The
company is currently analysing different alternatives to find a cost-efficient
solution for component and engine maintenance services and investigating
possible partnering opportunities in Catering. In addition, Finnair has
initiated numerous smaller saving measures throughout the company.
According to preliminary estimates, the largest cost savings will be achieved
in personnel and maintenance costs, each of these amounting to approximately
25% of the total savings target. The share of sales and distribution costs is
approximately 15% of the total savings target and that of IT, fleet and ground
handling costs combined approximately 30%.
Finnair estimates that approximately 10 million euros of its aim of reducing
annual costs by 140 million euros by 2014 will already be achieved during this
year. Implementation of cost savings that require structural changes are
expected to take place mainly in 2012 and the overall target is expected to be
achieved by the end of 2013.
Outlook for the second half of 2011
On October 6, 2011 Finnair updated its outlook for the second half of 2011 and
estimated that it will not reach profitability in the second half of the year.
The company's earlier expectation was that the second half of the year would be
profitable.
The current estimate is that the operational result of the second half of the
year will be slightly negative. However, it is expected that the result for the
second half of 2011 will be better than that of the first half of the year.
The company reiterates its estimate that the operational result for 2011 will
be negative. Finnair's turnover is expected to grow by more than 10% for the
entire year 2011.
Financial Result, July 1-September 30, 2011
In July-September 2011, Finnair Group's turnover was 607.2 million euros,
increasing 10.1% year-on-year.. The Group's operational result, i.e. EBIT,
excluding non-recurring items, capital gains and changes in the fair value of
derivatives and in the value of foreign currency denominated fleet maintenance
reserves was 27.6 million euros (41.9). The result before taxes was 3.1 million
euros (43.9) and the net result for the period was 1.9 million euros (32.4).
Changes in the fair value of derivatives and in the value of foreign currency
denominated fleet maintenance reserves impaired the reported result for the
third quarter by 15.3 million euros. The impact of this item in the
corresponding period of the previous year was positive by 8.4 million euros.
The exchange rate fluctuation of the US dollar in relation to the euro did not
affect the operational result significantly in the third quarter. At the end of
September, the degree of hedging for a dollar basket over the following 12
months was 72%.
In the third quarter, euro-denominated operating costs were 584.2 (513.9)
million euros. Fuel costs, including price and currency hedging, rose by 23.7%
and were 144.3 million euros. The company's personnel costs were 110.5 million
euros (107.0). Other rental payments were 36.2 million euros (20.9). This
includes the rental payments for capacity bought from other airlines, which
share has grown significantly due to increased use of leased capacity.
Financial Result, January 1-September 30, 2011
In January-September 2011, the Finnair Group's turnover was 1 680.3 million
euros (1 506.4 million euros in the corresponding period of 2010). The Group's
operational result, i.e. EBIT, excluding non-recurring items, capital gains and
changes in the fair value of derivatives and in the value of foreign currency
denominated fleet maintenance reserves was a loss of 29.3 million euros (2.0
profit). The result before taxes was a loss of 73.3 million euros (23.4 loss))
and the net result for the period was -54.9 million euros (-17.1).
Changes in the fair value of derivatives and in the value of foreign currency
denominated fleet maintenance reserves impaired the reported result for the
first nine months of the year by 7.0 million euros. The impact of this item was
-12 million euros year-on-year.
In the review period, euro-denominated operating costs were 1 722.2 (1 520.8)
million euros. Fuel costs, including price and currency hedging, rose by 25.7%
and were 408.8 million euros (325.1). The company's personnel costs were 337.7
million euros (324.8). Other rental payments totaled to 96.6 million euros
(61). This includes the rental payments for capacity bought from other
airlines, which share has grown significantly due to increased use of leased
capacity.
Net cash flow from operating activities in January-September 2011 was 46.4
million euros (48.4).
Return on capital employed for the last 12 months was 3.4% (-2.9) and return on
equity was -7.5% (6.4).
Disclosure procedure
Finnair Plc. follows the disclosure procedure enabled by Standard 5.2b
published by the Finnish Financial Supervision Authority and hereby publishes
its Interim Report for January-September 2011 enclosed to this stock exchange
release. Finnair's Interim Report for January-September 2011 is attached to
this release in pdf format and is also available on the company's website at
www.finnairgroup.com.
FINNAIR PLC
Board of Directors
Media briefing
Finnair will have its media briefing at 11:00 a.m. and analyst briefing at
12:30 p.m. at the World Trade Centre, Helsinki-Vantaa Airport, Lentäjäntie 3,
on October 27, 2011.
Finnair Plc
Communications
Arja Suominen
Senior Vice President, Communications and Corporate Responsibility
For further information, please contact:
Chief Financial Officer
Erno Hildén
telephone +358 9 818 8550
erno.hilden@finnair.com
Senior Vice President, Communications and Corporate Responsibility
Arja Suominen
telephone +358 9 818 4028
arja.suominen@finnair.com, comms@finnair.com
Investor Relations Officer
Kati Kaksonen
Financial Communications and Investor Relations
telephone +358 9 818 2780
kati.kaksonen@finnair.com, investor.relations@finnair.com
The consolidated financial statements for 2011 will be published on February 9,
2012. The annual general meeting of Finnair Plc. is planned to be held on 28
March 2012. The notice to convene the annual general meeting is given later on
by the Board of Directors.
Financial reporting in 2012:
The interim report for January 1-March 31, 2012 will be published on April 27,
2012.
The interim report for January 1-June 30, 2012 will be published on August 10,
2012.
The interim report for January 1-September 30, 2012 will be published on
October 26, 2012.
© 2024 Nasdaq, Inc. All Rights Reserved |