Finnair Oyj

Good day, ladies and gentlemen. I'm Erkka Salonen from Finner IR, and it's my pleasure to welcome you all to this Finner's first quarter 2023 earnings call. I have here with me Finner's interim CEO, Mr. Jaakko Schilt, and he is joined by our CFO, Mr. Kristian Pullola. I will now turn this call over to you, Jaakko. Please, go ahead.

Thank you, Erkka, and good afternoon on my behalf for this afternoon too. We are just keeping this from Vantaa, from our headquarters, and it's really extraordinary weather we are having here today, so it's almost 10 centimetres of snow. which we won't see at the end of April. However, now to the quarter one. The headline is that yields and operative cash flow remained at the good level. Strikes had a negative impact on the revenue and the result. And before we go further to the slides and the presentation, I'm elaborating a little bit the quarter It was definitely a different quarter to us from the operational perspective. First, we were hit by very severe winter conditions, so we had a number of kind of bad snow days, which had an operational and also the result impact. Also, we had two political strikes in Finland, in addition to some strikes in the European destination, especially in Germany. And the political strikes, first strike was two days where we needed to cancel 550 flights. We just were able to operate a handful of flights and an impact of those two days per day was in millions. However, we were able to mitigate the impact towards the customers relatively well. We were able to find reroutings for two thirds of the customers and one third we needed to refund. And then for the two week political strikes related to fuel supply when the Helsinki airport was barely, it was, I mean, the fuel supply to Helsinki airport was a minimum, but We were able to once again mitigate the customer effect on that one. Our operational reliability on time performance and regularity was on a very good level. However, it had naturally the cost implications to us and so on. And the next, let's look at then the kind of key figures. The revenue decreased 1.9% year on year. Operating expenses remained on bar with the previous year. They do the cost efficiency actions, although the capacity increased by 4.4%. And the second bullet is actually an excellent and very good news, because one of our strategic initiatives have been really focusing on the costs and now in this quarter we can see that it's definitely paying a dividend to hard work and cost control is important for any company but also especially for the airlines because the costs kind of carry us forward over the different economical cycles comparable EBIT was loss we were making loss comparable EBIT was minus 12 million and net result was minus 30 million and of course it is always a disappointment when you do a loss in a quarter especially because we had six positive quarters behind of us But then if I just take a little bit of distance to this one and discuss a little overall how the Finnair and how the industry have been doing on the quarter one, I mean, it is a seasonal business and this is what do we see and we have seen in the history too. As a benchmark and comparing it to 2019, we made a loss of 16 million at the quarter one. Unit revenue was lower than compared to last year. But we are still living in an elevated kind of unit revenue environment. It is 20% higher than 2019. Number of passengers decreased, and we saw decreased passenger load factors in far east European and domestic areas. But North America and Middle Eastern was really positive. And especially on Asia, I also would like to mention the Thailand. There, our load factors were very good. Overall, we were landing at 72% mark at the quarter. On-time performance was 75%, what is behind our targets. But actually, it's a very, very good result, taking into account of the special nature of the quarter, what we saw. And the customer satisfaction landing, the net promoter score landed at 34, what is internationally a very good value. Next, we are looking at our strategy implementation and what are the key highlights during the quarter on that area. I mean, we successfully... moved to a new era with our Finner Plus program, where we started to use Avios as a loyalty currency. There are new benefits baked into the program and the next steps on the Avios, we are actually then having a possibility to swap the points and the currency between our partner BA program. A second bullet there, it's about our fleet. When the Russian airspace closed, the 330 cannot do the longer routes via the North Pole or the Southern Route, and it can't really fly to Asia. So we needed to find the work for and the efficient use for those aeroplanes. And now we have, during the quarter, we located the second aircraft, the Qantas, It has been a successful operation. Qantas is very happy about the cooperation and also the customers, and now I'm happy to state that the whole 330 fleet is in efficient use. Also, for the fleet and the utilization aircraft, we used to have four narrow-body aircraft, wet lease operations with British Airways. Those aircraft returned back to Finnair on the 4th of April. I mean, it was all the time at the Finnair, but basically, we did the wet lease for the BA, and these aircraft, they are not visible in the figures as such, because they really started to fly for Finnair 1st of April. We submitted climate target validation to the science-based targets initiative. That is an important milestone on our path towards the carbon neutrality. SBTI is an organization who helps the companies to define the plan, how quickly and how much you need to reduce your emissions to reach the goal set by the Paris Climate Agreement. And then, in an AGM decided the reverse split of our shares, and that was successfully completed during the quarter.

Maybe to add then on the strategist theme, we today announced that we have gotten a rating from S&P. which improves the access of Finnair in the debt markets. And we also announced that we have today signed a 200 million euro secured revolving credit facility with four Nordic banks, which further improves the good liquidity position that the company has. And these are clearly kind of logical steps that we take under the... building a sustainable balance sheet strategy stream that we've had. The last year was about fixing the equity through profitability and the rights issue. Now we are setting ourselves up for putting the refinancing for the 25 maturities in place. And both the facility as well as the rating is the right step forward in that direction.