1
2
24.4.2019
Topi Manner
A seasonally weak first quarter
• Uncertainty in the global economy affected the market conditions
• Easter moved from Q1 to Q2
• Japanese and North-American routes performing well
• In China, the year started slowly
• Competition remains tight in Europe
• Overcapacity in the package holiday market
• Fuel costs have increased during Q1, including hedges
3
Growth in passenger demand varied between areas
Capacity
+10.4%
13th A350
Aircraft
4
Revenue increased by 5 per cent year-on-year and number of passengers reached a new Q1 record
Revenue
+5.0%
Operational
cost
+8.9%
Comparable
operating result
-16.2 M€(14.6 M€)
NPS
37*
NPS = Net Promoter Score
*New Customer satisfaction survey was launched in beginning of January 2019. In the new survey NPS is calculated based on
responses from all customers starting from beginning of 2019, including Finnair Plus and non-members. In 2018 NPS was calculated
based on responses from Finnair Plus members only and therefore these results are not comparable. In Q1 2018 NPS was 43.
Revenue by product
5
Strong Japanese market supported passenger and cargo demand
5
4139
Q1 2018
490
4771
673
41
517
68
Q1 2019
641
5.0%
Passenger revenue
Travel services
Ancillary
Cargo
+5.5%
+3.9%
+16.8%
-4.9%
• The growth in passenger traffic was driven by Japan
and supported the North Atlantic
• Ancillary sales grew most on European and
domestic routes
• Cargo growth was supported by good demand on
the routes between Japan and the Nordic countries
and rather weak comparison period due to the ramp
up phase of the new Cargo terminal
• Market overcapacity weakened travel service
revenue growth
Passenger Load Factor by area, %
➢ Passenger load factor 78,3%
➢ Comparison period historically high
➢ In long haul traffic performance between routes varied
6
Traffic between Asia and Europe is the foundation of Finnair’s revenue growth
➢ Traffic from Asia to Europe remains the source of the majority of
Finnair’s passenger revenue
89
8178
65
8383 8175
61
78
Asia Atlantic Europe Domestic Total
Q1 2018 Q1 2019
Q1/2019
2.2
EuropeQ1/2018 Asia Unallo-
cated
2.4
490.2
Atlantic
10.8
517.2
12.8
Domestic
-1.3
+5.5%
Passenger revenue Q1/18 vs Q1/19
Q1/2019 Change
Fuel costs 145.2 +14.0 %
Staff costs 129.7 +5.2 %
Passenger and handling services 127.5 +6.5 %
Depreciation and impairment 75.9 +5.5 %
Traffic charges 72.1 +10.8 %
Aircraft materials and overhaul 46.3 +21.1 %
Sales, marketing and distribution costs 41.6 +2.1 %
Property, IT and other expenses 33.3 +5.5 %
Capacity rents 32.1 +13.9 %
Operating costs (€703.7 million in total +8.9%)
7
Operating costs increased slower than capacity
• Capacity growth 10.4%
• Operating costs 8.9%
• Operating costs excluding fuel 7.6%
21%
18%
18%
11%
10%
7%
6%
5%5%
Fuel costs
Staff costs
Passenger and handling services
Depreciation and impairment
Traffic charges
Aircraft materials and overhaul
Sales, marketing and distributioncostsProperty, IT and other expenses
Capacity rents
The new more transparent cost structure
We are constantly renewing us
8
Customer experience
• New menu
• New Marimekko-textiles
ja Amenity kits
• WiFi instalments
• ATR- aircraft renewal
Responsibility
• 13th A350 aircraft
• Push for change
• Carbon offsetting
projects
• Reduce the use of
plastic
People experience
• 170 new employees and
some 280 summer workers
• Continuous development
of new ways of working:
Agile and Lean culture
• Developing occupational
safety and well-being at
work
Digitalization
• Aurinkomatkat Own
Vacation -App
• Finnair.com renewal
• 2.5 million customers /
month using our digital
channels
• AIG's insurance products
on Finnair's website
Our target: sustainable, profitable growth
9
Sustainable
• We will continue to focus
on sustainability by
updating our strategy
• Push for change
expansion
Growth
New destinations and more
frequencies
• Sapporo, Hong Kong and
Osaka, Tokio and
Guangzhou
• Punta Cana
• Hanover, Bologna,
Bordeaux, Porto,
Trondheim and Tromso
Profitable
• Yield mix
• Continuous
improvement of
productivity
• Capital efficiency
Two new EB members starting from 1.5.
• Ole Orvér, Chief Commercial Officer (CCO)
• Nicklas Ilebrand as SVP Strategy
Outlook
Global airline traffic is expected to continue growing in 2019.
Finnair expects increased competition as capacity is added,
particularly on routes linking Europe with Asia as well as in
short-haul traffic. The slowdown in the economy of Finnair´s key
markets and the continued uncertainties surrounding global
trade, including from Brexit, could impact the demand for air
travel and cargo.
Finnair plans to increase its capacity by approximately 10 per
cent in 2019, down from its 14.8 per cent capacity growth in
2018. This growth is mainly focused on the Asian market.
Revenue is expected to grow at a somewhat slower pace than
capacity in 2019.
In line with its disclosure policy, Finnair will issue guidance on
its full-year comparable operating result as part of its half-year
report in July.
10
12
Finance
Pekka Vähähyyppä
13
Capacity growth driving revenue growth
Passenger revenue Q1/2018 vs Q1/2019, Meur
• Strong capacity growth drove passenger revenue growth
• Demand growth was insufficient compared to capacity growth,
which had a negative impact on the passenger revenue
development compared to last year
ASK
-4.9
Q1 PY
56.1-26.4
PLF (load)
2.2
FX Yield,
mix,
other
Q1
490.2
517.2
+26.9
Q1 PY
6.8
47.4
-3.5
39.1
1.5
71.2
40.5
155.7
Travel servicesCargoAncillary
40.7
67.7
Q1
150.9
+4.9
Ancillary
Cargo
Travel services
Other revenue Q1/2018 vs Q1/2019, Meur
• In other revenue areas, cargo development was strong, rising
by almost EUR 7 million vs. last year
➢ Although in general cargo market growth have shown
some signs of slowing down
• Operating expenses excluding fuel +7.6% (ASKs +10.4%)
• Fuel costs including hedging results cost increased +14.0%
• Unit cost (CASK) -0.4%, CASK ex fuel at constant currency -2.8%
14
Fuel costs rose faster than capacity growth, weakening comparable EBIT
Cargo 6.8
-8.1
Revenue Mainte-
nance
-3.9
-6.4
-7.0
Traffic
charges
14.6
Rents Passenger
services
Fuel
-17.8
-4.0
-7.7
Other (NET) Q1 EBITStaff
-16.2
Depreciation
-7.7
Travel services-3.5
Ancillary1.5
Q1 2018
Passenger revenue 26.9
31.8
-30.8 M€
Q1/18 hedging gain 9.2 M€
Q1/19 hedging gain 8.0 M€
15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hedging ratios 2019: 71 %
H1: 76 %
H2: 69 %
Fuel costs Q1/18 vs. Q1/19 Fuel hedges 31 March 2019
Changes in EUR/USD and volume growth impacted fuel costs
16
Development of unit revenue and unit cost
6.466.48
CASK developmentRASK development
• Unit cost (CASK) decreased by 0.4%. Unit cost at constant
currency excluding fuel decreased by 2.8%.
(Q1/2019 vs Q1/2018)
• Unit revenue (RASK) decreased by 4.9%. Unit revenue at
constant currency decreased by 5.3%.
(Q1/2019 vs Q1/2018)
5.164.79 4.56 4.88 5.10
1.321.36
1.411.39
1.36
0
1
2
3
4
5
6
7
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
CASK ex fuel Fuel
6.15 5.97 6.27
6.63 6.70 7.006.53 6.31
0
1
2
3
4
5
6
7
8
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
171) HFS = Held-for-Sale. 2) I-B = Interest-bearing
Healthy balance sheet supports future investments
• Equity ratio 22.2% (23.4%)
• Gearing 75.9% (80.4%)
2 103
11
351
508
445
2 155
17
133
31.3.2018
929
987
1 709
378
1 073 1 746
337
31.12.2018
1 062
461
321
2 208
31.3.2019
603
661
143
899
31.3.2019
673
918
31.12.2018
1 774
675
3 944
117
31.3.2018
524
4 052 4 0523 944
3 9653 965
Assets HFS
Cash
Provisions
Fleet
Other assets
Other fixed assets
Liabilities HFS
I-B debt
Tickets
Other liabilities
Equity
Cash flow investments for the financial year
2019 relate mainly to fleet and are
expected to total approximately 440 million
euros, including advance payments.
Operating cash flow positive during Q1
18
564
181
31.12.2018
417
133
365
1,062
475
656697
31.3.2019
1,073
Cash funds-11.2 M€
Commercial paper, deposits and funds > 3 months
Commercial paper, deposits and funds < 3 months
Cash and bank deposits
Liquid funds in cash flow
-36.6
655.8
2018
59.7
Comparable
EBITDA
Purchase
of own
shares
Loan
payments
56.6
Other
-0.5
Investments
696.7
-25.5
Working
capital
Other
-126.8
114.1
Cash
Q1
Operating+148.3mEUR
Cash flow+40.9mEUR
Investing-70.2mEUR
Finance-37.1mEUR
20
Appendix
Income statement
in mill. EUR Q1 2019 Q1 2018 Change % 2018 LTM
Revenue 672.9 641.1 5.0 2 849.7 2 881.5
Other operating income 14.6 19.8 -26.1 73.7 68.6
Operating expenses
Staff costs -129.7 -123.3 5.2 -499.6 -506.0
Fuel costs -145.2 -127.4 14.0 -581.0 -598.8
Capacity rents -32.1 -28.2 13.9 -122.4 -126.3
Aircraft materials and overhaul -46.3 -38.2 21.1 -162.9 -171.0
Traffic charges -72.1 -65.1 10.8 -300.8 -307.9
Sales, marketing and distribution costs -41.6 -40.8 2.1 -159.0 -159.8
Passenger and handling services -127.5 -119.7 6.5 -453.9 -461.6
Property, IT and other expenses -33.3 -31.6 5.5 -131.3 -133.0
Comparable EBITDA 59.7 86.5 -31.0 512.6 485.7
Depreciation and impairment -75.9 -72.0 5.5 -294.2 -298.1
Comparable operating result -16.2 14.6 218.4 187.6
21
Hedging currencies and sensitivities 31 March 2019
Fuel sensitivities10% change
without hedging
10% change. taking
hedging into account
Hedging ratio
(rolling 12 months from date of financial statements) H1/2019 H2/2019
Fuel EUR 67 million EUR 29 million 76% 69%
Currency distribution
%
1-3
2019
1-3
20182018
Currency sensitivities
USD and JPY
(rolling 12 months from date of financial statements for
operational cash flows)
Hedging ratio for
operational cash flows
(rolling next 12
months)
Sales currencies 10% change without hedging10% change. taking
hedging into account
EUR 59 63 55 - -
USD*3 2 4
see below see below see below
JPY8 6 10
EUR 33m EUR 14m 67%
CNY 5 5 7 - -
KRW3 2 3
- -
SEK4 5 3
- -
Other18 17 17
- -
Purchase currencies
EUR59 63 61
- -
USD*33 29 32
EUR 83m EUR 35m 63%
Other8 8 7
22 * Hedging ratio for USD-basket, which consists of USD- and HKD net cash flows. The sensitivity analysis assumes that the Hong Kong dollar continues to correlate
strongly with the US dollar.
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