Finnair Oyj ((FI:FIA1S)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Finnair’s recent earnings call painted a picture of resilience and adaptability amidst a challenging landscape. The overall sentiment was balanced, highlighting significant achievements in customer satisfaction and revenue growth, yet acknowledging the operational and geopolitical hurdles that the company faces. Despite these challenges, Finnair’s performance in Q3 was commendable, showcasing their ability to navigate through industrial actions and unexpected maintenance issues.
Solid Q3 Financial Performance
Finnair reported a solid financial performance for the third quarter, achieving a comparable operating result of EUR 51 million. This was despite the industrial action that led to cancellations and a direct financial impact of EUR 18 million. The company also saw a 2% increase in revenue, underscoring its resilience in the face of adversity.
Customer Satisfaction Improvement
The airline made significant strides in customer satisfaction, as evidenced by the increase in its Net Promoter Score (NPS) from 28 to nearly 40 between August and September. This improvement reflects Finnair’s commitment to enhancing the customer experience, which is crucial for maintaining competitive advantage.
Strong Performance in Asia
Finnair’s operations in Asia demonstrated robust growth, with strong double-digit increases in both Available Seat Kilometers (ASK) and revenue development. The positive trends in Revenue per Available Seat Kilometer (RASK), Revenue Passenger Kilometers (RPK) yield, and load factors further highlight the region’s importance to Finnair’s overall strategy.
Return of Capital Payment
The Board of Directors announced a second installment of the return of capital payment, scheduled for November 7th. This move indicates Finnair’s strong financial position and its commitment to delivering value to shareholders.
5-Star Rating from APEX
For the fourth consecutive year, Finnair received a 5-star rating from the Global Airline Passenger Experience Association (APEX). This accolade underscores the airline’s dedication to providing an exceptional passenger experience.
Impact of Industrial Action
The industrial action had a significant impact on Finnair, leading to the cancellation of over 300 flights and a direct financial hit of EUR 18 million. The company also faced additional indirect impacts, highlighting the challenges of labor disputes in the airline industry.
Unexpected Maintenance and AOG Issues
Unexpected maintenance and Aircraft on Ground (AOG) issues negatively affected Finnair’s ASK and revenue development. These operational challenges underscore the importance of effective maintenance planning and risk management.
North Atlantic Underperformance
The North Atlantic market posed challenges for Finnair, with a double-digit decline in RASK and a high single-digit decline in load factors. This underperformance highlights the competitive and volatile nature of this market.
Closure of Russian Airspace
The closure of Russian airspace resulted in higher navigation and landing costs, impacting Finnair’s operating expenses. This geopolitical challenge adds to the complexity of international airline operations.
Environmental and SAF Costs Increases
Finnair’s decarbonization efforts led to an increase in costs by EUR 10 million per quarter. The end of free emission allowances and a 2% Sustainable Aviation Fuel (SAF) mandate contributed to these rising expenses, reflecting the airline’s commitment to environmental compliance.
Revised Guidance
Finnair revised its guidance for the fiscal year, narrowing the range for its comparable operating result to EUR 30 million to EUR 60 million, down from a previous upper limit of EUR 130 million. This adjustment reflects the continued softening of demand and yield in North Atlantic traffic, as well as the indirect impacts from industrial actions and the lack of anticipated decrease in oil prices. The airline also anticipates a 2% increase in ASK during 2025, with projected revenue of approximately EUR 3.1 billion.
In conclusion, Finnair’s earnings call highlighted a balanced sentiment, with notable achievements in customer satisfaction and revenue growth, tempered by operational and geopolitical challenges. The company’s ability to adapt and navigate through these challenges will be crucial for its future success.