2q 2013 result - finnair/media/files/f/... · market environment remains challenging • passenger...

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2Q 2013 Result

Finnair 2Q 2013 Result, 14 Augustl 2013

Profitable growth in Q2, productivity improvements still required

• Our target is profitable growth, despite challenges

• 140 million euros of savings achieved ahead of schedule

• New routes Xian & Hanoi have delivered according to plan

• Productivity improvements still required to achieve profitability and growth targets

• The completion of previously announced, additional savings program of 60 million euros is vital for our future

• Profitable growth could enable creation of new jobs


Market Environment remains challenging

• Passenger markets robust, capacity growing less than traffic– Growth in international passenger travel continues to be driven by

Asia-Pacific region, Europe picking up

• Air Freight Volumes showed signs of sife in June

• Growth in the BRICS economies, including China, is slowing– Growth in passenger traffic driven by leisure travel

• Oil prices remain high



Strategy execution yielding results

Growth continued in Q2

• Turnover grew by 2.6% – Q2 Turnover 609.7 M€– Operational EBIT 6.1 M€ (16.2 M€)– Euro-denominated revenue impacted by the weakening of Yen– EBT improved by the sell of Norwegian shares and was 21.2 M€

(-24.0 M€)

• Strong load factors in Q2– Unit revenue per available seat kilometre (RASK) -3.1%, at constant

currency -1.7% – passenger load factor (PLF) 78.2% (+0.7%-p) – yield per revenue passenger kilometre (RPK yield, -4.5%) down

• Sound financial position– Equity ratio 32.7%– Gearing 13.3%– Adjusted gearing 70.4%– 425 M€ short-term cash and cash equivalents as per 30 June 2013


Turnover growing steadily

Quarterly turnover, € million

6 Finnair 2Q 2013 Result, 14 Augustl 2013

Quarterly Operational EBIT, € million

-60

-40

-20

0

20

40

60

2009 2010 2011 2012 2013

Q1 Q2 Q3 Q4

0

100

200

300

400

500

600

700

2009 2010 2011 2012 2013

Q1 Q2 Q3 Q4

*Operational 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

Load factors at a healthy level

North America

ASK 5,5 %

RPK 1,4 %

PLF -3,4 %-p

Traffic revenue* 2,3 %

Leisure traffic

ASK -1,5 %

RPK 0,0 %

PLF 1,3 %-p

Traffic revenue* -6,8 %

Europe

ASK 10,4 %

RPK 9,7 %

PLF -0,5 %-p


Total Traffic

ASK 5,6 %

RPK 6,5 %

PLF 0,7 %-p


Asia

ASK 3,9 %

RPK 6,6 %

PLF 1,9 %-p

Traffic revenue* -1,1 %

Domestic

ASK 4,3 %

RPK 2,6 %

PLF -1,1 %-p


Cargo

ATK -2,2 %

RTK 0,2 %

OLF 1,9 %-p

Traffic revenue -5,4 %

Asian share 50% of the total capacity

* passenger revenue

7Finnair 2Q 2013 Result, 14 Augustl 2013

Passenger revenue split

42%

39%

8%

7% 4%

Asia

Europe

Domestic

Charter

North Atlantic

*Passenger revenue

€140 million of targeted savings achieved, 6 months ahead of schedule

25%

24%

14%

10%

9%

8%

8% 3%

Target €140 million

maintenance staffother leasesales cateringground handling fuel


230%

80%

131%

129%

195%

128%

68%

50%

100%

15%

7%

2%

3%

11%

0%

9%

0% 100% 200%

fuel

groundhandling

catering

sales

lease

other

staff

maintenance

TOTAL

Achieved savings to target

achieved implemented to target

Supplementary 60 Million euro savings program target includes all functions

9

17m€18m€

8m€17m€

Collective labour agreements are the best way to create sustainable future together with the personnel• Wage structures• Working hoursSavings target includes all functions

= Pilots = Cabin crew

= IAU personnel groups = Other functions and personnel

Outlook for 2013 – change in turnover guidance

New guidance:

• The uncertain economic outlook in Europe, weakened consumer demand and slower growth in Asia increase the uncertainty of the future development of air traffic. Fuel costs are expected to remain high in 2013 as well, and the demand for air traffic is estimated to grow moderately.

• Finnair estimates its 2013 turnover to be approximately at the 2012 level due to the pressure that the weak yen puts on the Japan generated unit revenues. Unit costs excluding fuel (CASK excl. fuel) are expected to decrease compared to 2012. Finnair estimates that its operational result will show a profit in 2013.



Financials

Q2 Key figures

Key Figures Apr-Jun 2013

Apr-Jun2012

Change %

Jan-Jun 2013

Jan-Jun 2012

Change %

Turnover and result

Turnover EUR million 609,7 594,4 2,6 1 202,9 1 186,2 1,4

Operational result, EBIT EUR million 6,1 16,2 -62,4 -11,6 -7,3 -58,5

Operational result, % turnover % 1,0 2,7 -1,7 %-p -1,0 -0,6 -0,3 %-p

Operating result, EBIT EUR million -11,8 -16,6 28,9 -25,6 -35,3 27,6

EBITDAR EUR million 51,5 65,7 -21,7 79,6 92,1 -13,5

Result before taxes EUR million 21,2 -24,0 188,4 2,5 -48,7 105,2

Net result EUR million 17,0 -18,7 190,9 1,2 -37,9 103,3

Balance sheet and cash flow

Capital expenditure, CAPEX EUR million 27,0 10,3 162,1

Net cash flow from operating activities EUR million 78,6 92,3 -14,9

Share

Share price at end of quarter EUR 2,70 1,75 54,3 2,70 1,75 54,3Earnings per share, from the result of the period* EUR 0,13 -0,15 189,7 0,01 -0,30 102,7

Earnings per share EUR 0,11 -0,16 167,1 -0,04 -0,33 88,7

12 Finnair 2Q 2013 Result, 14 Augustl 2013* Before Hybrid Bond interest

Operational EBIT build-up in Q2 2013


Mill. Eur

16,26,1

-0,3

10,0

-0,7

-11,7

-0,3-3,1

-13,6

17,1

11,9-10,2

-9,2

0,0

10,0

20,0

30,0

40,0

50,0

60,0

Airline business: RASK & CASK development Q2 2013

-3,1 %

-0,7 %

-2,4 %

3,4 %

-6,7 %

-9,7 %

-3,6 %

6,0 %

-10,6 %

3,8 %

6,4 %

-20% -15% -10% -5% 0% 5% 10% 15% 20%

RASK, unit revenue

CASK, unit cost

CASK, excl. Fuel

Fuel cost

Personnel

Depreciation & leasing

Traffic charges

Maintenance

Ground handling

Catering

Other costs

Change, y-o-y, %


• Unit cost excluding fuel (CASK, excl. fuel) down by 2.4%• Unit revenue (RASK) at constant currency -1.7%

Aviation services operational result has been transferred from other expenses to maintenance, catering and ground handling expenses starting from Q1 2013. 2012 comparison figures were changed respectively.

€140 million of targeted savings achieved, 6 months ahead of schedule

25%

24%

14%

10%

9%

8%

8% 3%

Target €140 million

maintenance staffother leasesales cateringground handling fuel


230%

80%

131%

129%

195%

128%

68%

50%

100%

15%

7%

2%

3%

11%

0%

9%

0% 100% 200%

fuel

groundhandling

catering

sales

lease

other

staff

maintenance

TOTAL

Achieved savings to target

achieved implemented to target

Significant cumulative unit cost* decrease achieved


-7,6 %-11,3 %

-12,7 %

-14,0 %

-12,0 %

-10,0 %

-8,0 %

-6,0 %

-4,0 %

-2,0 %

0,0 %

2011 2012 2013H1

*Excl. fuel, adjusted for 2010 ash and industrial action

Operational costs grew less than capacity

Operational costs

620,2 615,8

584,6 608

602

621,9

0

500

1000

1500

2000

2500

3000

2012 2013Q1 Q2 Q3 Q4

2,428.7

Mill. Eur

167,6 169,4157,9 171,5179,6165,2

0

500

1000

2012 2013Q1 Q2 Q3 Q4

670.3

+8.6%

Mill. Eur+4.0%

* Hedging taken into account

The share of fuel costs 28.2%


Fuel and personnel biggest cost items in Operational costs Q2 2013, total of 608 Mill. Eur


Change, y-o-y, %

-17,6 %

-3,6 %

1,4 %

-3,4 %

38,3 %

42,9 %

0,4 %

16,5 %

-8,8 %

-10,6 %

8,6 %

4,0 %

-40% -20% 0% 20% 40%

Aircraft leasing

Sales and marketing

Tour operations

Depreciation

Other rental payments

Maintenance

Traffic charges

Ground handling and catering

Other costs

Staff

Fuel

Total28,2 %

16,5 %

10,7 %

9,7 %

8,7 %

6,4 %

6,1 %

5,1 %3,2 %

2,9 % 2,3 %

Fuel Staff costs

Ground handling and catering Traffic charges

Other costs Maintenance

Other rental payments Depreciation

Sales and marketing Tour operations

Aircraft leasing

Strong financial position supports business development and future investments

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 Q2

Strong balance sheet

Equity ratio Gearing Adjusted gearing

%


-150

0

150

300

450

600

750

2009 2010 2011 2012 2013 Q2

Good cash position over years despite significant investments

Net cash flow from operations

Investment, gross

Short term cash and cash equivalents

M€

Finnair is the first European carrier to receive next generation Airbus 350 XWB’s

Competitive advantage:• Up to 18% more capacity: from 270 seats to 310-320 seats• Estimated seat cost -30% compared to Airbus 340• Improved revenue position with superior product• 11 orders and 8 options


Fuel, spot-price development



*2012 Incl. Hedging profit of 18 Mill. EUR

**2013 Incl. Hedging loss of 4 Mill. EUR

Hedges are wearing off:Hedging loss of 4 M€ in Q2

Rolling hedging policy

Hedging positions, 30 August 2013Hedge ratio H2 2013: 75%


• Finnair hedges jet fuel positions 24 months ahead within the limits defined in the hedging policy

• Finnair is 75% hedged for the second half and 60% for first half of 2014

• The company protects itself against the risks of currency, interest rate and jet fuel positions by using different derivative instruments, such as forward contracts, swaps and options

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

hedge ratioupperlower

24

Thank you

Finnair 2Q 2013 tulos, 14.8.2013

2q 2013 result - finnair/media/files/f/... · market environment remains challenging • passenger...

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