Finnair Oyj

Good day, ladies and gentlemen. I'm Erkka Salonen from Finner Investor Relations, and it's my pleasure to welcome you to this Q4 2025 earnings call. I'm joined by our CEO, Turku Kuusisto, and our CFO, Pia Aaltonen-Forsell. After the presentation, we have a Q&A session, and you may present your questions either by dialing in or using the chat function of the webcast. But with these words, I hand it over to you, Turku.

Thank you, Erkka. And very good afternoon to all of you joining us today. And today we have shared, in my opinion, very good news earlier when we published our Q4 report that indicated a very strong profitability development, especially driven by the continued strong demand and solid execution. Pia will discuss in short the result in in detail, but I would characterize it as a sum of multiple factors. Of course, we benefited from the lower fuel price, but at the same time when we added into the equation the increased cost from the environmental compliance other regulatory charges, I would say that the cost management and effectiveness was extremely well executed among the Finner team. At the same time, we still saw and will see a strong demand, especially in the Japanese and European markets, that performed, in my opinion, relatively well. That led into a close to a 1% revenue growth, but above all, or more importantly, our comparable operating result increased almost by 29% versus the compare that already was actually significant improvement from 2023. As you recall, some months back, mid-November, we announced our long-term financial targets and also the updated strategy. And therefore, I'm also very happy that already now we start to see pieces of evidence that the strategy execution or implementation has started with good velocity. As a concrete example of regaining the trust after the, let's say, more difficult or disruption shadowed first half, we restored the confidence of our customers and also discussed about the employees, but also the external stakeholders that we have as a concrete example being that with PS Lead, we did successfully issue a 300 million euro bond just before the year closing. If and when we will take the regional perspective, as mentioned, our investment in further strengthening the Japanese foothold after the double crisis is paying off. All in all, the Asian markets continue double-digit growth, both in terms of capacity and revenue. And then if I take a deep dive into our foothold or market presence in Japan in the summer season of 2025, we flew 25 weekly frequencies between Helsinki and multiple destinations in Japan. And we are going to actually further strengthen that for the next summer season when we are adding three additional weekly frequencies from Helsinki to Osaka. Also, as already mentioned, Europe as a traffic region performed relatively well during Q4, whereas the domestic bar was a bit more soft in terms of load factor development. And then Middle East, when we kind of characterize the profile of the business performance, we need to continue to keep in mind or bear in mind that we didn't fly anymore from Copenhagen or Stockholm to Doha under the Qatar Airways collaboration or umbrella. So, therefore, the revenue development and the ASK development is extremely negative. Big question, of course, still related to how will the North Atlantic traffic develop during the forthcoming quarters. It is still in Q4. We saw some softness in terms of RSK development and also load factors, but here we need to continuously also bear in mind that our ASK's 9% is allocated to the North Atlantic traffic, and we, of course, continue to monitor the development extra carefully. Then speaking of customers, obviously when the first half of 25 was overshadowed by complex CLA negotiations that led into severe disruptions, we faced, of course, declining NPS. But I'm extremely happy when I started to see already in September that the NPS is recovering very rapidly after we are capable of stabilizing the operation and continue to fly with the kind of recognized finner quality and safety and punctuality. So therefore, in Q4, which is the most demanding winter season, the NPS among the total customer population of ours graded 33, which is a good result in network carriers global benchmark. And if and when I'll take the core customer perspective, that is the core of our new strategy, among the top tiers of Finner Plus frequent flyer program, we are actually currently trending above 40. And as you can see from the chart on the right-hand side, the number of passengers continue to grow by 2% year over year. Then also maybe related to the disruptions that we faced during the first half of 25, it's important to address that we haven't witnessed significant changes in the capacity market share in our core markets. So these two charts, in my opinion, provides a lot of information that our stronghold in Helsinki and our stronghold in the Europe-Asia traffic is holding extremely well and we will continue to develop our market presence accordingly. And then with this slide, try to capture the highlights of 2025. So basically the year was split into two. Difficult first half because of the industrial action and associated disruptions that caused directly more approximately 70 million euros of negative EBIT impact and then of course we were not capable of flying the ASK plan that we had planned for the first half but ever since we got the CLA disruption behind us early July we were capable of stabilizing the operation very quickly and actually then started to implement our profitability improvement actions and then towards through Q3 towards Q4, we improved the momentum and velocity and therefore very happy to report a full year result of 60 million euros in form of comparable EBIT. Unfloat ticket liability also grew by some 7%, which is a good forward-looking indicator of how the ticket sales did develop during the fourth quarter. Pia will discuss this in more detail. And then on the right-hand side, or the bottom right-hand side, you can see that the board of directors yesterday decided to propose a €0.09 offer. capital return to be decided in the AGM held later in this quarter. But maybe with these words, I would leave it for Pia to discuss the finance also in more detail.

Thank you, Turcka, and good afternoon, ladies and gentlemen. I just want to say a big thanks to our team, to our customers, and to our partners. It's a great privilege to be able to present so strong quarterly figures, as Turcka said, on the back of a start of the year that was still very challenging on many fronts. I think we have ended the year on a very strong note. And therefore, I wanted to offer you a few sort of quarterly time series here with some comparisons on some of the key figures just to sort of have that perspective. I'll start a bit with the top line and the revenue. As Turka explained, we are in a market momentum in our key markets that's already a bit more positive. So we have seen some growth in the demand. We have seen some growth in our top line of about sort of 1% on the full year basis, which is pretty much equal to also, if you count in the wet leases, how much we added to the capacity sort of holistically during the year. Please still keep in mind that due to the earlier strike situation, we did have cancellations, we have paid compensations, et cetera. Those all, of course, impact the top line as well. If I look at the quarter itself, and especially if I think about sort of the different parts of our business, maybe there's a few words still worth sort of mentioning. We have seen growth sort of through our different partners. through our different categories. So the ticket revenues, we've also seen this increase on the ancillary side. Ancillary is very important from our strategic perspective. The growth was not that fast during the quarter, The competition period a year ago had a very strong campaign towards that end of the Q4 in 24. So that sort of impacts a little bit the competition here, but we are still continuing on a good path. That is really important for us. I mean, already reaching over 50 million impact per the quarter. And finally, cargo was sort of fairly stable in the period. Maybe those words are enough on the revenue side. Then let's turn our attention to the middle of the page, which is the graph on the operating profit, so the comparable operating profit to be exact. And you see our result was a stellar 62 million for a fourth quarter. This is the strongest fourth quarter on record that we could find using the current accounting methods. And when you compare it to a year ago where we made 48 million euros, we actually had a bit of strike impact, although it was 5 million a year ago in the figures and none in this period. But from a cost perspective, there were a few external factors that are worth mentioning. I'll say first that we were supported year on year in the development by fuel prices and also a weaker dollar. That did bring us on a quarter-on-quarter comparison maybe 15 million of benefit. On the other hand, we also had higher sustainability regulation related costs that added more than 10 million per quarter, as well as higher navigation and landing costs that also added about 10 million per quarter. So the headwinds of these external factors were actually bigger than the tailwinds. We still had a 50 million uptick, and this came very much from somewhat higher sales, so we were growing, and we were able to do that in a good way, also then sort of being able to use the scale benefits, have a good operational performance, and that helped us then to improve the result year on year. Finally, Turku already talked about the unflown ticket liability. I think that's a good sign of the momentum that we have right now that keeps on a stronger side, 7% increase sort of year on year. Of course, our business has a lot of seasonality, so you do see the quarterly variance here, but we are on a very good path. I have one more slide really from the profitability perspective. And I wanted to talk to you about revenue, RASC, and CASC, and just give still some perspectives into that development. I'll start on the revenue per available seat kilometer, the RASC key figure here. And many of the things that I mentioned before on the revenues obviously play in here. I think if you look at the sort of year-on-year development, we can say it's a bit of a sort of hanging in there, you know, sort of making the best of the situation in a challenging year with the strikes, et cetera, during the first half. So clearly, you know, there's been an impact out of that holistically. If we look at yields, I think it's worth still picking up on what Turka also said, showing the geographical areas before. Though we see a positive development holistically year on year throughout Asia, particularly Japan has been a very important market for us, as Turka said, we also see a good development in Europe. if you look at the full year, but the North Atlantic traffic that has been also from a yield perspective under pressure. And that's due to the sort of holistic situation that we face in that market. And I think that puts a little bit of a lid or a little bit of a pressure here on our yield development. So kind of keeping all of that in mind, I still think we have a decent development through the year. On the cost side, the lower fuel costs are helping us, but those other higher regulatory costs, as well as landing navigation costs, et cetera, they all come through here. So you can still see that we've done a good job in mitigating some of the impacts. And I think, you know, just looking from everything, there's also some seasonal variants. I take one example, maintenance costs. I think we managed that really good in the fourth quarter. And obviously, sort of between the quarters, there could be a little bit of changes. I think we have also structurally made some changes as we are through 23, through 24, and a little bit in 25 also done some lease buyouts that are to some extent then shifting between the lines, the cost of maintenance. that does give me a nice bridge now to my final page, which is more on cash flow and balance sheet. So let's have a look there. Our cash flow was robust, obviously cash flow very much built on the operative performance, the result as well in itself. I think there's only one thing that I wanted to pick up from the cash flow side page here that you can see on the slide that you see on the left hand side. And that is to explain that If you are keen on details, you know, look sort of from our reporting a year ago. We had a bit of a reclass there on the credit card holdback that sort of boosted from a reporting perspective the figure in the year-on-year comparison. But I think sort of operationally a good performance in this quarter. Let's talk a little bit about CapEx going forward. We do expect CapEx amounts, you know, 400 to 500 million per year. We are also guiding sort of about that midpoint for 2026. You can see that in 2025, we were coming towards a little bit lower figure. Actually, the gross capex was less than 200 million. There was quite a lot of buyouts still in this. It was a bit north of 100 million, so lease buyouts. And there was also 64 million of sort of more maintenance-related capex and then some investments, for example, into digital, etc., So that was really what we were working with in 25. Looking into 26, this will increase a bit, aligned with the communication that we had on our CMD in November. And finally, it's good to end the year with a robust cash position and still with a good leverage, 1.8, and a good cash-to-sales ratio, as you can see in the chart to the right. So I think we have a good setup for starting to work into 2026. And on that note, Turka, please, over to you.