Finnair Oyj

Good day, ladies and gentlemen. I'm Erkka Kalonen from Finner Investor Relations, and it's my pleasure to welcome you to this Q1 2026 earnings call. I'm joined by our CEO, Turku Kuusisto, and our CFO, Pi-Aaltanen Forssell. After the presentation, you may ask questions either by dialing in or using the webcast chat function. But with these words, I hand it over to you, Turku.

Thank you, Erkka. Very good afternoon also on my behalf. Earlier this morning, we published, in my opinion, a strong Q1 report, especially given the fact that the Q1 is typically low season for our sector and also for Finnair. While, of course, at the same time, when reporting stronger results, we do see that the risk related to the operating environment have increased. And we aim at also describing that how do we see the current situation, especially when it comes to the war in Middle East area. But if I very briefly summarize the Q1 results and Pia will get you through more of the details. But if I start with the operating results, we were almost at break even. And I think that this is a remarkable improvement from Q1 last year. although we did face the industrial action already in Q1 2025. But the direct impact of the industrial action at the time was somewhat 22 million euros, and the kind of the comparable operating result was minus 40 million euros. So over the past 12 months' time, we've been capable of improving the operational platform, our commercial capabilities, and executing the new strategy so that the result actually improved by some 40 million euros in Q1 to Q1 comparison. Revenue increased by double digit number, especially driven or fueled by the strong demand that we especially did see towards the end of the quarter in Asian traffic, given the situation in Middle East, the closing of air spaces of Doha and Dubai airports, of course, consequently increased the load factors of our Asian flights, but at the same time, January and February already performed very strong in terms of Helsinki Asian traffic, so this was kind of a final boost towards the end of the quarter. The number of passengers increased by some 7.3%, and that then resulted also in increased load factors basically in all of our traffic areas except Middle East. Pia will discuss in greater detail when it comes to our hedging policy, but when we started this fiscal year or calendar year, our hedging profile was actually rather supportive for what we have now witnessed. 86% of the fuel purchases were hedged in the beginning of this fiscal year, and at the end of this quarter, 82% of the Q2 hedges fuel price is already hedged, and then 69% for the rest of the year. And then when we take the customer perspective, something that we are really now focusing on investing in when it comes to the new strategy that we launched mid-November last year, the customer satisfaction is on the rise. Across the total population, we did see in international comparison, in my opinion, a good Good result is 36. That was a two points improvement from a year ago. And then when we double click into the core customers of ours, those who applies us with the most, cold card holders, platinum and Lumo tier members, we are already scoring well above 40. So that's something that we can be rather satisfied with and In my opinion, the strategy implementation has only started. And then I will revert back to this one, but over the last running 12 months timeframe, the number of FINRA Plus members, active FINRA Plus members, has increased significantly. Speaking of the traffic areas, if I start with Middle East, which is of course the most drastically changed area, we need to keep in mind that in the Comper quarter of 25, we still had until mid-January also operation from Stockholm to Doha and from Copenhagen to Doha, but then of course the rather drastic change in terms of ASK and revenue is mainly explained by the fact that we did stop our operation from Helsinki to Doha and Dubai when this geopolitical situation escalated late February. But we need to continuously keep in mind or put this into a perspective that the Middle East traffic area has been some 3% of our capacity or annual revenue. And then taking the very positives, starting from Asia, ASK grew by some 9% but the revenue and RASK actually grew even more so and also the load factors up by some 7% and which is a consequence of strong investment capacity allocation to Asian traffic and we have also We continue to see kind of the activation of Japanese travelers flying to Europe and also activation of the business travelers. But as I already mentioned, the last mile or the final push is pretty much because of the closed air spaces or hubs in the Middle East. And we did get some spillover effect to our Asian flights. Domestic pretty much stable, part of it last year, but also Europe did perform a bit better than we expected. ASK crew by some 4%, but revenue 8%, and again, load factors developing rather positively. So we are in good position when it comes to starting the summer season during which we have more than 90 destinations in the Europe. North Atlantic traffic, something that we've discussed very frequently with you or even intensively. We did see a increase of capacity, but at the same time now the revenue development follows the capacity add-ons, so therefore at least the decline has stopped and we start to see some positive signals when it comes to forward-looking bookings and also business travel when it comes to origination or OD USA. And then, very briefly, just again reconfirming that the capacity is growing steadily according to our plans, except the Middle East traffic area, and then the market shares are pretty much stable, so we don't see anything drastic when it comes to our position at the Helsinki Airport or Helsinki Europe traffic, and also we continue to be very relevant player in the Europe-Asia, especially in Europe-Japan roots. And then maybe a few words related to the fuel supply chain issues and of course even what's taking place or happening in the Middle East and straight of Hormuz that has influenced First and foremost, the price of jet fuel and crude oil. But if this situation prolongs, there might be also issues when it comes to fuel availability. If I start with our home market being the Helsinki airport and Helsinki hub, we do have a rather solid situation. And based on the discussions of our main supplier here in Finland, we do see that the availability of fuel is extended until the end of our summer season. and also some extra capacity, so therefore if we need to tanker when it comes to short-haul flights in Europe, we do have enough fuel capacity in Helsinki to do so. Some 80% of our European destinations can be flown by utilizing the tankering option. In North America, we don't see a big risk when it comes to the supply. And then, of course, the Far East Asia is the question mark and something that we work very intensively with on daily basis to understand that what's the situation. But based on the information that we have today on the destinations and ODs that are relevant for us, we don't see short-term issues or short-term shocks There's also related to potential few availability. But maybe with these words, I would hand it over to Pia to continue on the financial figures.

Thank you, Tuukka. Good afternoon, ladies and gentlemen, and if we haven't met, my name is Pia Altonen-Forssell, I'm the CFO of Finner. And, of course, looking at the Q1 performance, I completely agree with you, Turta. I really see a seasonally weak quarter where our results have still been greatly improving. And in the graphs that you can see here, we have brought a bit of a quarterly perspective on some of the key figures over a longer period of time, And maybe if you look at the revenue, just for a slight moment, I think, first of all, obviously, you do see that there's a big sort of uptick compared with the first quarter of last year. As Turka said, there were some disruption impacts there already at that point, the 22 million on the result. So you could say, okay, you know, what about the comparison period? but maybe you can in this graph also have a look back at 24, which was a sort of more stable year, and also there you can see that we do have a great improvement. I want to talk a little bit about the result in the same context, in the same way obviously a big improvement compared with last year, and if we look at sort of how the year has started. I think particularly March was impacted by the war in the Middle East through both the fuel costs, obviously, as well through these shocks. That kind of went through the world, including then the supply-demand balance. So clearly we have seen a very strong demand, for example, in Asia, but not only in March. So I do say that our year has started in a good way, and I think particularly our cost controls have really been in place. And I'll still come back to that in my next slide. And finally, our cash flow was strong. I'll take the opportunity to come back to some of the details around that in one of my later slides. So first, I'll go next to look a bit at the unit revenue and the unit cost for the RASC and the CASC. And I think this is important because we have a strategy where we are foreseeing growth. We are foreseeing capacity growth, passenger growth, and we are, of course, very keen to do that in a profitable way to ensure that we can reach our strategic target of a 6% to 8% EBIT margin in 2029. So looking at some of the elements, obviously here first, if we look at the unit revenues, we can see that in this quarter they were supported. So we had good load factors. Yields, if you look historically, were somewhat improving. And, of course, we have as well sort of been able to navigate and manage the capacity growth that we saw in the quarter. So this is a good development, and particularly if you kind of compare quarter to quarter, quarter one growth, of last year to quarter one now, it's a really strong development. But please have a look at the cost as well. The fuel costs have really been sort of top of mind for a good reason. I mean, the prices, the spot prices have, of course, really, really been spiking. But if you look at sort of the proportion of the fuel costs to the overall cost profile, you know, even normally we would be sort of 25 to 30 percent. And so this is a very significant part. But you can see that thanks to our risk management, this sort of early part of the situation has been well managed. And actually, the cost development holistically has been under control, including the other costs. While we have been growing, of course, we have been adding some costs, but proportionally, we managed to keep this under control. So, you know, I think I'm happy with the development during the quarter there. Next, I'll turn to a few of the topics around our balance sheet. So first, I'll highlight the unflung ticket liabilities. And why I'm doing that is that I think it's, of course, you know, it's a big balance sheet item, of course. You can see it's 762 million. But what it also talks about is that we have seen bookings coming in. And sometimes when someone is like asking that are people booking, kind of what's happening, I think this is sort of the euro or the balance sheet way for a CFO to answer that yes. it's up 10% compared with a year ago. And you can see that if you go further back in history, it's up even more. So we do see those summer bookings coming in right now. And this is, of course, one reason contributing to the strong cash flow that you could see earlier, the 274 million operating cash flow in the quote. Another thing that, of course, has been greatly supporting our strategic journey is the strong cash flow. We have an investment program. You can see that the capex in this quarter was around 100 million. That did include 20 million of the new embryos. So when positioning the order, we also have taken some early costs or early cash out relating to that. But I want to say that this is also, you know, a pretty good description of sort of the balance between the cash flow and the capex going forward. I mean, we had a particularly strong cash flow right now, but also in our CMD we said we would expect, you know, at least sort of a 500 million-ish operating cash flow per year. And obviously with sort of the finalized plans for investments that we have made right now, it seems likely that we are somewhere north of 400 million per year, but maybe only slightly north of that. So this 100 million sort of per quarter is a fairly good proxy for that. I just wanted to say that because when you then look at our capital structure, I mean, our equity was strong in the quarter. Our net debt keeps going down. Our leverage was 1.2 times. And our cash ratio to sales is like 30%. So I think we are well positioned to operate sort of in a thoughtful way in this rather complex environment right now. And I think we are also well positioned to continue to execute on our strategic journey. And my final slide is really some details on the hedging. I wanted to bring this up. Turka already did speak about the fact that we have a good hedging ratio for Q1, for Q2, 82%. We have 69% for the remaining part of the year. And you can also see here that we are still sort of having a cost level of less than $700 per ton on these, which sort of for our cost structure is, sort of very close to, I would almost say normal. But obviously, we also know that the hedging ratio is going down over time. There are still some hedges in 27. Nonetheless, of course, the percentage is going down. But I think this is giving us sort of plenty of time to react and prepare for the situation. So with that, Tuukka, I would hand back to you.