Finnair Oyj - Half Year financial report

Finnair Group Half-Year Report 1 January–30 June 2017

Finnair’s earnings growth continues: all-time high profit for Q2

April–June 2017

  · Revenue increased by 11.2% year-on-year to 633.4 million euros (569.6)*.
  · Available seat kilometres (ASK) grew by 6.8%.
  · Comparable operating result was 37.5 million euros (3.2).
  · Operating result was 89.1 million euros (0.2) including i.a. sales gain on
an A350 aircraft.
  · Comparable EBITDAR** was 103.2 million euros (56.3).
  · Net cash flow from operating activities amounted to 162.2 million euros
(119.6), and net cash flow from investing activities to -136.5 million euros (
-149.0).***
  · Unit revenue (RASK) increased by 4.1% year-on-year.
  · Unit cost (CASK) decreased by 1.6% and unit cost at constant currency
excluding fuel increased by 3.1% year-on-year.
  · Ancillary and retail revenue per passenger grew by 8.2% year-on-year to 11.8
euros.
  · Earnings per share were 0.50 euros (-0.04).

January–June 2017

  · Revenue increased by 7.4% year-on-year to 1,187.7 million euros (1,106.0)*.
  · Available seat kilometres (ASK) grew by 3.5%.
  · Comparable operating result was 28.5 million euros (-12.2).
  · Operating result was 79.1 million euros (-17.4).
  · Comparable EBITDAR** was 153.3 million euros (92.7).
  · Net cash flow from operating activities amounted to 186.1 million euros
(130.0), and net cash flow from investing activities amounted to 8.6 million
euros (-396.3).***
  · Unit revenue (RASK) increased by 3.7% year-on-year.
  · Unit cost (CASK) increased by 0.1% and unit cost at constant currency
excluding fuel increased by 2.2% year-on-year.
  · The 20-million euro cost-efficiency programme was completed in full by the
summer.
  · Ancillary and retail revenue per passenger grew by 8.7% year-on-year to 12.3
euros.
  · Earnings per share were 0.41 euros (-0.19).

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

** Comparable operating result + depreciation + lease payments for aircraft.

*** Net cash flow from investing activities includes, in the second quarter, 91
million euros of investments in money market funds and other financial assets
maturing after more than three months. In the first year-half, these decreased
in net terms by 95 million euros. These investments are part of the Group’s
liquidity management.

Outlook

Outlook published on 28 April 2017
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.

Outlook on 20 July 2017

The demand outlook for passenger and cargo traffic in Finnair’s main markets
continues to involve uncertainty. Finnair reiterates its previous estimate 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. Full
-year revenue is expected to grow approximately in line with capacity.

At current fuel prices and exchange rates, Finnair expects its comparable
operating result for 2017 to broadly double year-on-year (2016: 55 million euro)

CEO Pekka Vauramo:

Finnair is now growing at an accelerated speed: We are opening new routes,
adding capacity in existing key routes, and recruiting new employees. Customer
satisfaction as measured by Net Promoter Score is at an all-time high. We now
provide our passengers, among other things, with wi-fi throughout the wide-body
-fleet and new convenient inflight payment solutions in the entire fleet. We
also launched a ground transportation service allowing the customer to purchase
a complete door-to-door journey connected to a flight ticket. Our sales and
marketing efforts in selected target markets are paying off, supporting our
market share growth in strategic routes. Market conditions also developed
favourably in the second quarter, and hence our growth, helped by successful
timing, got a flying start. For the next winter season, we are planning to grow
faster than ever before.

In the second quarter, Finnair carried a quarterly record number of passengers.
This was also shown in our revenue, which grew at a double-digit rate. Sales
grew particularly due to the solid demand for the backbone of our network,
traffic between Asia and Europe, and our load factors rose. In particular, our
sales developed favourably in Japan, Korea and China.

Both corporate travel and the materialisation rate of group travel have been
clearly stronger than a year ago. Our new destinations, such as San Francisco,
have sold well, similarly to the additional frequencies we added to Tokyo. Our
expanded range of destinations and increased capacity in Europe matched the
needs of our Asian and Finnish passengers. Outbound travel from Helsinki has
picked up from a year ago, as has traffic from the United States to the Nordic
countries and Russia due to our improved network of connections.

On the back of solid demand, our passenger load factor rose considerably in the
second quarter, and ticket prices held up well. I am also pleased to see that
ancillary revenue per passenger continued to increase, and the expected upturn
in cargo materialised. These positive developments were also reflected in our
result: our comparable operating profit in the second quarter improved by almost
35 million euros from the slightly positive result a year ago, marking nearly
three years of result improvement. It was also particularly encouraging that our
customer satisfaction has continued to improve: Finnair’s Net Promoter Score
during the quarter was 48, an all-time high. We are focusing on service
development and improving the smoothness of the entire passenger journey to
offer a unique Nordic experience to our customers.

The favourable first half of the year provides a solid foundation for us to
build the future Finnair. In the second half of the year, our capacity will grow
at a rate of approximately 15 per cent. The third quarter is seasonally the
strongest in our business, and favourable market conditions appear likely to
continue. Therefore, we anticipate our comparable full-year operating profit to
broadly double from last year.

Financial reporting

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


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

FINNAIR PLC
Board of Directors

Briefings

Finnair will hold a result press conference on 20 July 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 0404
(Finland), 0200 883 464 (Sweden), 0800 279 7204 (UK) or +44 (0)330 336 9412 (all
other countries). The confirmation code is 750402. To join the live webcast,
please register at:
https://slideassist.webcasts.com/starthere.jsp?ei=1154164&tp_key=c3de9cad8c

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
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.

Liitteet:

07197504.pdf