Finnair Oyj

Good day, ladies and gentlemen. I'm Erkka Salonen from Finnair Investor Relations, and it's my pleasure to welcome you to this Q2 2026 earnings call. I'm joined by our CEO, Turkka Kuusisto, and our CFO, Pia Aaltonen-Forsell. After the presentation, you may ask questions either by dialing in or by using the webcast chat function, and you can already send the questions during the presentation. But with these words, I hand it over to you, Turk. Please, go ahead.

Thank you Erkka and very good afternoon to all of you and welcome to this result presentation event. Earlier this morning we have reported very strong performance during the second quarter of 26. which is kind of a continuation of the two earlier quarters Q4 2025 being the all-time high Q4 and also strong performance continued during the first quarter. What is kind of especially important to address when it comes to the second quarter performance in my opinion is actually rather Holistic success in multiple areas. For instance, the revenue growth of 16.4% comes across the all service lines that we have. Passenger revenue grew by some 15%. Ancillary sales more than 20%. And cargo really did overperform our expectations by 40% growth. And also Aurinko Matka did deliver a high single digit growth. Then when we translate the 16% revenue growth into comparable operating result, which was 78 million euros, it's very important to address the comparison versus last year. Last year we reported some 10 million euros of comparable operating EBIT. But we need to then factor back or add back the cost of the industrial action that we faced last year. Based on our best estimate, the cost of our impact of industrial action last year during the second quarter, there are some 28 million euros. So if we add that back operationally, we delivered some 40 million euros of comparable EBIT. So basically what happened this year that we were almost capable of doubling the result. Pia will cover the operating cash flow in more detail but of course very happy to see close to a 200 million euro operating cash flow which is of course essential when it comes to or pivotal when it comes to funding the investment scheme that we have communicated to you as well earlier this year. What is behind the revenue growth is a kind of a complex topic. Of course, the demand in the Asian traffic started very positively already in January-February timeframe and was somewhat boosted by after the events that have taken place in Middle East after the escalation of the Iran-US war. Pia will also discuss this in greater detail. But in addition to the Middle East situation, I want to emphasize that we did In the West, even adding frequencies to our Far East Asia traffic this summer season by flying 28 weekly frequencies between Helsinki and Japan, which again makes Finland the largest European carrier between Japan and Europe. At the same time as we will shortly see in the traffic area split also our demand increased quite a lot in our European traffic area and also the kind of the minor decline that we faced in North Atlantic traffic actually turned into a positive development. Again in Pia's presentation or slides we have more details when it comes to the fuel hedging position but in hindsight of course it's easy to acknowledge that the hedging policy of Finner and the actions Pia and her team have taken have provided us with the stability, predictability and also some capabilities to control the cost position that is the largest in our P&L. We do have a We had 82% hedging ratio for the second quarter and for the remaining six months the ratio is 76. Already in connection with the first slide, one key highlight when it comes to the implementation of the new strategy. During the second quarter, we have now signed letters of intent to source six second-hand Airbus A320 aircraft, and if and when these agreements will be turned into definite agreements, these aircraft will enter our fleet already in 2027. Speaking of customers, I'm very happy to report these numbers. Throughout the last Eight months or so, we have continuously developed the NPS to the positive direction. And throughout Q2, we again scored, in my opinion, a very solid number, 42, which compares to 33 of the peer average. And that's, of course, a consequence of smaller actions, introduction of new digital components, digital elements. But above all, this is the resultant of excellent operational Capability, operational excellence that our team has delivered throughout the Q2. For instance, our punctuality has been 99% during the Q2, but then again, of course, the on-time performance is challenged. during the summer season because of the congested air traffic control platform in Europe. But all in all, very happy to see these numbers. And when we take a bit of a deep dive into the core customer section of ours, we are capable of reporting actually a bit higher figures. Then taking the geographical split, we decided to remove the Middle East box for obvious reasons. We have suspended our flights to Dubai and Doha since late February. Our intention is to restore the flights from Helsinki to Dubai if the safety and security situation allows towards the winter schedule or winter season. Asia super strong, revenue grew by 20%, load factor improved by 6%. We can be extremely satisfied with this development situation. And as already mentioned, Europe also did perform very well in my opinion. We increased the capacity by 8%, whereas the revenue grew double digit figure and load factors also somewhat developed to the positive direction. As already mentioned North America or North Atlantic also improved. We did decrease the capacity by some tactical kind of elimination of certain frequencies to improve the load factors and yields consequently and therefore again the revenue grew by some six percent. This is a bit crowded slide, but we also wanted to cover this one with you that, in my opinion, illustrates the very stable market share in Helsinki at the Helsinki hub, Helsinki-Europe traffic, pretty much where it has been over the past two years. And then Europe to Asia traffic, minor increase in the market share starting from the first quarter of 26 with these both kind of market share Grafs gives us a great position to continue the network design and network development when moving forward and also the implementation of the new strategy. Now I would hand it over to Pia for a while to discuss the financials in more detail.

Thank you very much, Turkka. And good afternoon, everybody. It is, of course, a pleasure to present these strong results. So let me start by just an overview of some of the KPIs that Turkka has already mentioned. Revenue growing by 16%, resulting in a comparable operating result of 78 million. You can see that that's really the highest figure that you can see on this chart here for the operating result. And then also giving us a very healthy cash flow. And I will dig a little bit deeper now into the components, both of the revenues and the cost. So let me take you there to the next slide. I think these are important metrics to follow. So RASC and CASC, so looking at the revenues per available sea kilometer and also the costs as we are by our strategy in a growth phase. So we want to keep on growing our capacity and with that then of course also having a good look at these key figures. Now this quarter in particular on the revenue side, obviously there was one big external event, which was the war in Iran and the situation in the Middle East that obviously also pushed some of the demand towards other suppliers than the Middle East hubs. And when we are looking at the development of our RASC, obviously we need to take that into account. We are also stating here that that's a significant contributor to the RASC improvement. And there's also an underlying strong continued demand that I think we saw earlier in the year. I'll give you sort of one fact point of that that I find important from a Finnish perspective. Actually, consumer confidence has increased. For the first time for really many years actually been growing to be more positive and sort of the willingness to travel also amongst sort of Finnish customers and Finnish consumers has certainly increased. Maybe I can also refer back to the slide that Turkka already presented where we looked at the RASC development a bit also by the regions. And we know that the traffic between Europe and Asia is really important for us and continues to be so, and was of course impacted by this crisis. And there we saw RASC increase, let me check the figure, by 16%, so obviously a big increase. But we also saw RASC increase on North Atlantic. 14% and we also saw a good increase in Europe and in domestic 4-5%. So we can see that all of our areas have contributed. So I still want to reiterate what Turkka said about the good operational performance, the balanced decisions when it comes to our network, the utilization of the capacity, this sort of holistically contributed to this really strong top-line development and good RASC development as well. Now, jet fuel and that cost side is certainly on our mind. And I actually have a couple of more slides on that. So I think it's enough to say here that that certainly has increased from a sort of market cost perspective. Our hedges have certainly protected us a lot. And there are also typically a bit of delays until some of those sort of operational costs of the fuel increase really hit the P&L. So all, you know, that also contributed into a somewhat, let's say, delayed impact. And we will discuss the forward looking hedges in just a little bit. We have also seen some increases in other costs, as you can see here. And it's really personnel costs that have increased predominantly because the number of passengers really grew by more than 7% in this quarter. So sort of Finnair's own production certainly has increased. And I would say the other cost elements are pretty well under control. Maintenance, for example, fairly stable, etc. Okay, so those were some of the key highlights from the P&L perspective that I wanted to mention. Let me take you to a few topics when it comes to our overall financial position, when it comes to our balance sheet. And first, there's a KPI that really also reflects sort of the market and the continued strong what we might call sort of order intake but ticket sales and the ticket liabilities that we have in our balance sheet at the moment are at 757 million euros. That's a really high number and you can see this sort of level increase that we already saw in Q1 it has been kind of keeping there. So I think it really shows this improved market momentum also compared with So this summer season for sure we have seen a lot of very healthy sales. Then we have continued our CAPEX program as Turkka has talked about. And I think this is important that we have launched the strategy. We are now working according to that. and you see that the capex in the quarter is about 72 probably for the full year we will go over and beyond the 400 million which is well aligned with the two around 2 billion for the strategy period that we have talked about in our strategy. And then finally, our balance sheet strength. I think our financial position is stronger than it has been for a long period of time. If you look at our leverage, it's down to 0.9 times at this point in time. And when you look at the development of cash position versus our revenue, it's growing steadily even when we are investing. I think at the point of time where we are today with the uncertainty, that's certainly a very good situation to be in. And then talking about the uncertainty, my two last slides will be more focused on the fuel situation. First, we wanted to bring a more holistic view on the fuel situation. Obviously, I know many of you are also following the jet fuel situation in particular, but I still think it's worth noting that kind of through this crisis, obviously a lot of focus on the Brent and the crude oil and the developments there. And from our perspective, unfortunately, of course, when it comes to jet fuel, you know, the situation has been even more constrained. As we speak today, we have seen 10 days again of continued conflict in the Middle East, and with that increases in crude oil price, but also increases in the jet fuel price. So really, if we compare with last year, we are at a completely different level, and the situation continues from a market perspective to be very constrained. If we then look at Finnair's position, our hedging position kind of confirmed by Turkka really protected us in the second quarter. And I think we were also able to be active in the market of hedges again when the situation calmed down a bit. So if we now look at our hedge position at the end of June, I think we have a good protection, 81% to Q3, 71% to Q4. and of course also with hedges into next year but of course on a falling curve and still also the price levels, the costs there are not exactly the same as they were pre-war but still on a reasonable level compared with where the market stands today. So this continues to protect us also our long-standing relationship with suppliers continues to protect us. We haven't seen any supply or availability issues that would have disturbed our production thus far These are topics that we will need to continue to monitor. Obviously, it's a very volatile situation as we speak, and we will continue to work the way that we have also worked in Q2, a very tight collaboration here between the operations, of course, the network, the revenue, and as well then the risk management and the treasury bit. So we will continue along those lines. But with that said, Turkka, back to you.