Finnair's interim report depressed investors.
Finnair the situation is starting to look brighter after the hard times, although there are plenty of difficulties.
The airline's net sales in October–December increased by 5.8 percent from the comparison period and amounted to 727.2 million euros.
The comparable operating result was 22.5 million euros. Comparable operating profit improved from the comparison period as turnover increased more than operational expenses.
Both net sales and operating profit fell short of the consensus forecast collected by analysts.
Finnair's share price dropped significantly on Wednesday morning. At its worst, the stock fell by about eight percent, but at 11 o'clock the stock was down by about 5.4 percent.
The number of passengers increased by 6.5 percent in the comparison period.
The passenger occupancy rate, which is often essential for airlines' profitability, was 73.1 percent. A year earlier, the passenger occupancy rate in October–December was 72.3 percent.
Size for the year, Finnair's result turned profitable after difficult times.
While in 2022 the profit before taxes was EUR 370.7 million in loss, now we reached a profit before taxes of EUR 119.1 million.
Turnover increased by 26.8 percent from the comparison period and was nearly three billion euros.
The comparable operating profit was 184.0 million euros and the operating profit was 191.4 million euros.
Interim CEO Jaakko Schildt stated in the press release that cost efficiency and sales promotion measures, supported by a favorable market, produced a good result.
Finnair the passenger occupancy rate, i.e. how many seats have been sold, was still relatively weak at 73.1 percent in October–December.
The passenger occupancy rate of 76.4 percent for the whole year is not commendable either, even though it increased from the comparison period.
Finnair's former strength, i.e. the core of its Asian strategy, short flights from Europe over Russian airspace to Asia, has been lost with Russia's war of aggression against Ukraine.
But there are also bright spots.
Finland the remote location gives Finnaires pricing power, especially for air travel by Finns.
Consumers may have noticed the phenomenon in the advertising of Finnair flights.
Outbound flights to vacation destinations are advertised with cheap “starting” prices, but when looking for suitable days, you will notice that there are very few advertised cheap flights.
Temporary CEO Jaakko Schildt reminded in the financial statement release that Finnair's comparable operating result was profitable for the sixth quarter in a row and the net profit for the fifth quarter in a row.
The EUR 570 million subscription rights issue carried out in the fall substantially strengthened the financial position of the indebted company.
Among other things, it was possible to pay off the capital loan based on the state's own capital.
In December, Finnair reduced its debts by 230 million euros.
In December, Finnair announced that it had purchased six Airbus A321 narrowbody aircraft, which it had previously leased from BOC Aviaton.
The action improves the calculated cash flow yield compared to flying with rented planes.
Prevailing tensions in the Red Sea can also serve Finnair's interest in air cargo.
When prices rise and shipping difficulties plague sea freight, for example trendy clothes have started to be sent to Finland more and more by air freight.
In the new in its guidelines, Finnair stated that international air traffic is expected to continue to grow in 2024, but there is uncertainty in the operating environment.
Finnair plans to increase its total capacity by more than 10 percent in 2024. The capacity estimate includes the leasing of planes and crews. Growth is mainly focused on Asia and Europe.
Finnair expects revenue to grow somewhat slower than capacity in 2024.
The board proposes to the general meeting that no dividend be distributed for 2023.
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