LONDON – Today, the Finnair Group announced a Q2 data report.
COVID-19 grounded Finnair’s (AY) passenger operations to a near halt and revenue was mainly driven by cargo-only operations, cash position, and equity was restored to the pre-pandemic level.
The airline’s assumption was that it operated the current minimum network throughout Q2 due to the coronavirus situation.
At the same time, the company estimated that the recovery of air traffic began in stages from the beginning of July 2020.
However, the pace of recovery cannot be assessed at this stage, leaving the outlook for the Q4 of 2020 unclear.
The airline estimated that with the current minimum network, its comparable operating result began a daily loss of approximately €2m throughout the Q2, despite cost adjustments.
Due to the current situation, AY’s revenue will decrease significantly in 2020 compared to 2019.
The comparable operating loss will be significant in the financial year 2020 as the company announced in its profit warning on 16 March 2020.
In addition, AY’s capacity will decrease significantly this year compared to 2019. Due to these factors, AY will also update its financial targets for the strategy period.
Q2 data report
- Earnings per share were -0.25 € (0.04).
- Revenue decreased by 91.3% to €68.6m (789.1).
- Fuel costs decreased by €147.3m (-81.6%) due to the COVID-19-related decline in capacity although it was partly netted by the impact of changes in fuel prices.
- The comparable operating result was – €174.3m (47.2). The operating result was – €171.2m (47.9).
- Financial net expenses were €46.0m (19.7) and they increased significantly, with c. €29m of the increase related to jet fuel and foreign exchange hedging that was reclassified from other comprehensive income.
- Net cash flow from operating activities was – €463.7m (176.8) and net cash flow from investing activities was €262.1m (-147.0).
- The number of passengers decreased by 97.5% to €0.1m (3.9).
- Available seat kilometres (ASK) decreased by 97.2%.
- Passenger load factor (PLF) was 33.1% (-49.4 points).
- Earnings per share were -0.46 € (-0.02).
- Revenue decreased by 56.8% to €629.8m (1,457.3).
- Fuel costs decreased by €148.6m (-45.6%) due to the COVID-19-related decline in capacity although it was partly netted by the impact of changes in fuel prices.
- The comparable operating result was – €265.4m (31.0). The operating result was – €266.8m (30.3).
- Financial net expenses were €125.7m (40.3) and they increased significantly, with c. €84m of the increase related to jet fuel and foreign exchange hedging that was reclassified from other comprehensive income.
- Net cash flow from operating activities was – €597.2m (325.0) and net cash flow from investing activities was €194.8m (-217.2).
- The number of passengers decreased by 61.0% to €2.8m (7.1).
- Available seat kilometres (ASK) decreased by 56.4%.
- Passenger load factor (PLF) was 71.3% (-9.3 points).
In Q3, AY gradually increases its capacity and will operate 25% of flights in July compared to the same period in 2019. Based on the current assumption, the share of flights operated increases to 50% in September.
There are uncertainties relating to COVID-19 development and lifting of travel restrictions. As a result, the outlook remains unclear and the company does not provide revenue guidance for Q3.
Statement from Finnair
Topi Manner (46), AY CEO, says: “AY’s second quarter was characterized by the pandemic. It resulted in our capacity dropping to 3%, as during the Q2 we only maintained flight connections that are critical for Finland.”
“The demand for cargo-only flights remained high throughout the quarter and we flew 602 one-way cargo flights, mainly between Finland and Asia. Cargo exceptionally accounted for over 70% of our revenue for the quarter, and its profitability remained at a good level.”
Manner also says: “We have also continued implementing our cost reduction programme. As communicated in May, we target a permanent annual cost reduction of nearly 80 million euros from the beginning of 2022, compared to 2019.”
It remains clear that whilst the outlook may not be clear, something that can be determined is that airlines are starting to begin the recovery phase and fly back to previously served destinations.
From there, revenues can be established and from there forecasts can be made based on such COVID-based behaviour.
Only time will tell such financial behaviour from the likes of Finnair but in theory, it should be anywhere but down from here.