10 february 2016 finnair/media/files/f/finnair-ir/...finnair 2015 kolmannen vuosineljänneksen tulos...

Finnair2015 kolmannenvuosineljänneksen tulos

30.10.2015Toimitusjohtaja Pekka VauramoTalousjohtaja Pekka Vähähyyppä

1 Finnair Q4 & FY 2015 Result, 10 February 2016

Q4 & Full year Result 201510 February 2016

2015 was a turnaround year

• Full-year operational profit of 23.7 M€– Growth begun with the A350 entry into service– Record number of 10.3 million passengers– Good result performance from Travel Services– Ancillary revenue grew markedly and was over

100 M€

• We are preparing for growth– Larger aircraft and more seats to feeder traffic – New destinations in Asia– Largest recruitment in history

• A350 entry into service– Three A350-aircraft currently in use– Smooth introduction into service


Q4 2015: Performance improvement continued• Q4 was fifth consecutive quarter

of result improvement

• Revenue growth of 6%

• Good result from Travel services, Estravel business sold

• Ancillary sales continued to grow substantially, +42 % y-o-y

Finnair Q4 & FY 2015 Result, 10 February 20163

Q4 Market environment: increase in travel• Leisure and business travel increased clearly:

– Terrorist attacks in Europe had a negative, short term effect on some routes – strikes and strike threats brought some last-minute customers.– Strong passenger demand on Chinese routes was sustained in the fourth quarter.

• Package tours market saw higher loads and average prices.

• Decline in the price of jet fuel was dampened by strong USD, other USD-denominated costs increased.

• Finnair gained market share in European traffic while market share in Asian traffic declined slightly from last year.*

• The Atlantic Joint Business (AJB) performed well in the Premium segment, and the Siberian Joint Business serving Japanese routes gained market share.

• Overcapacity and weak business environment in cargo traffic continued.

Finnair Q4 & FY 2015 Result, 10 February 20164 * Finnair’s estimates based on MIDT data collected on the sales volumes of travel agencies and Finnair’s estimates of airlines’ sales through their own sales channels, such as online.

Q4 revenue increased by 6%, operational result in profit

• Revenue increased 5.9% to 586 M€– Growth in passenger traffic & Travel services– Ancillary sales + 42%– Revenue from Cargo decreased

• Operational result* turned to slight profit of 0.8 M€, increased by 10 M€– Fuel cost -21 M€, OPEX +21 M€, +3.8%

in total

• Fx impacts increased both unit revenues and costs

5

* Operational result (EBIT), excluding non-recurring items and changes in the fair value of derivatives and in the value of foreigncurrency denominated fleet maintenance reserves. Finnair Q4 & FY 2015 Result, 10 February 2016

450

500

550

600

650

Q1 Q2 Q3 Q4

Revenue, M€

2013 2014 2015

585

0.8

-40

-20

0

20

40

60

80

Q1 Q2 Q3 Q4

Operational result, M€

2013 2014 2015

Non-recurring items contributed 100 M€ to operating result

Non recurring items included:

• The sale and leaseback of two new A350 aircraft

• Negative non-recurring items related to the phasing out of A340 aircraft

• The sale of certain properties at Helsinki Airport to Finavia

• The sale of Estravel


Q4: Positive trend in passenger traffic and travel services, revenue from cargo decreased

7

0

100

200

300

400

500

600

700

Q4 2014 Q4 2015

Ticket revenues Ancillary servicesCargo Other revenueTravel Services

553 M€585 M€

+8 %

-18 %

-13 %

+9 %

+42%

• Passenger traffic ticket revenue, ancillary sales and travel services revenue grew significantly y-o-y.

• Cargo revenue decreased, partly reflecting the discontinuation of cargo freighter flights in 2014.

• Other Group External revenue decreased mainly due to sale of Travel Retail store operations in October 2014.


Q4: Strong development in passenger traffic


ASK: Available Seat KilometresRPK: Revenue Passenger Kilometres

PLF%: Passenger Load Factor, %ATK: Available Tonne KilometresRTK: Revenue Tonne Kilometres

Ticket revenue: passenger revenue including leisure flightsAtlantic/Siberian Joint Business contribution included in the figures.

*Includes cargo freighter flights

North America

ASK mill km 597.5 54.2 %

RPK, mill km 470.2 52.5 %

PLF% 78.7 -0.9 %-p

Ticket revenue, Mill € 46.4 %

Europe

ASK mill km 3,111.5 5.7 %

RPK, mill km 2,407.6 7.0 %

PLF% 77.4 0.9 %-p


Asia

ASK mill km 3,794.8 1.7 %

RPK, mill km 3,038.2 2.6 %

PLF% 80.1 0.7 %-p


Domestic

ASK mill km 411.6 23.2 %

RPK, mill km 276.1 24.5 %

PLF% 67.1 0.7 %-p

Ticket revenue, Mill. € 21.6 %

Cargo*ATK mill km 338.8 2.9 %

RTK mill km 209.7 -6.9 %

Cargo revenue, Mill € -16.0 %

Total traffic

ASK mill km 7,915.4 7.0 %

RPK, mill km 6,192.1 7.8 %

PLF% 78.2 0.6 %-pTicket revenue, Mill. € 9.4 %

44%

40%

10%6%

Ticket Revenue Split, M€

Europe

Asia

Domestic

North America

Domestic traffic continues as challenging


• Norra sale completed

• Profitability remains to be a challenge in Domestic traffic

• Typically seasonal and one-directional traffic

• Low load factors on multiple routes

• More flights to Lapland for winter season 2016-2017

• Number of cancellations due to pilot shortages in the beginning of the year 2016, adjustments in the traffic program in Feb-Mar

A350 entry into service continues

• Three A350 aircraft in use; 7 by the end of 2016

• Launch of A350 destinations slightly postponed due to minor delays in deliveries

• In March, next A350 destination Hong Kong

• Good operational reliability

• Very positive customer feedback

• Provides and excellent platform for building Nordic Customer Experience


Preparing for growth: average size of aircraft increases, more feeder capacity with new deliveries

Larger aircraft, younger fleet New deliveries, more seats

• New deliveries of leased A321’s from summer 2016 onwards: – Temporary leases for 2 aircraft for

summer 2016 – Long term leases for 6 new aircraft in

2017-2018

• More seats to Airbus narrow bodies:– 6 to 13 additional seats per aircraft

• Embraer fleet downsized


Aircraft Type

7Airbus A319 2

Owned2 Leased

6Airbus A320 4

4Airbus A321* 7

3Airbus A330 5

5Airbus A340 -

Airbus A350 1 2

Outlook for 2016

• Despite of the demand outlook for passenger and cargo traffic in Finnair’s main markets involving renewed uncertainty, Finnair estimates that, in 2016, its capacity and revenue will grow.

• The lower price of jet fuel supports Finnair’s financial performance in 2016. In accordance with its disclosure policy, Finnair will issue guidance for its expected full-year operational result in connection with the January-June interim report.

• BoD proposes to AGM that no dividend is distributed for 2015



Financials

Result highlightsQ4

• Revenue 585.5 M€growth 32.8 M€ and 5.9% y-o-y

• Available passenger kilometres (ASK) 7,915 mill +7.0 % vs PY, Revenue passenger kilometres (RPK) 6,192 mill +7.8%

• Operating expenses 588.8 M€+21.4 M€ (3.8 %) vs PYLargest changes: fuel costs -21.0 M€staff costs +14.8 M€

• Operational EBIT improved by 10.1 M€to 0.8 M€

• Non-recurring items +99.6 M€

Full year 2015• Revenue 2,324 M€

growth 39.5 M€ and 1.7% y-o-y

• Available passenger kilometres (ASK) 31,836 mill. +3.1 % vs PY, Revenue passenger kilometres (RPK) 25,592 mill +3.3%

• Operating expenses 2,316 M€decrease of 23.2 M€ (-1%) vs PYLargest changes: fuel costs -64.9 M€traffic charges +27.6 M€sales & marketing +8.6 M€

• Operational EBIT improved by 60.2 M€to 23.7 M€


Revenue and operational result returned to growth

Revenue, M€ Operational result, M€


2150

2200

2250

2300

2350

2400

2450

2500

2011 2012 2013 2014 2015 -80

-60

-40

-20

0

20

40

60

2011 2012 2013 2014 2015

Key figures Q4 2015 Q4 2014 Change % 2015 2014 Change %Revenue and result

Revenue, EUR million 585.5 552.7 5.9 2,324.0 2,284.5 1.7Operational EBITDAR, EUR million 59.5 43.5 36.7 231.2 176.6 30.9Operational result, EUR million 0.8 -9.3 > 200 % 23.7 -36.5 > 200 %

Operational result, % of revenue 0.1 -1.7 1.8 %-p 1.0 -1.6 2.6 %-pOperating result, EUR million 85.0 -41.4 > 200 % 121.7 -72.5 > 200 %Net result, EUR million 66.5 -47.1 > 200 % 89.7 -82.5 > 200 %Balance sheet and cash flow

Adjusted gearing, % 45.8 107.5 -61.7 %-pGross capital expenditure, EUR million 291.5 14.0 > 200 % 329.7 82.4 > 200 %Net cash flow from operating activities, EUR million 7.1 -15.7 > 200 % 171.0 24.2 > 200 %Share

Share price at the end of quarter, EUR 5.42 2.48 118.5Result for the period per share, EUR 0.52 -0.37 > 200 % 0.70 -0.65 > 200 %Earnings per share (EPS), EUR 0.44 -0.38 > 200 % 0.57 -0.71 > 200 %


Key figures

* Before interest on hybrid bond

Traffic key figures

Key figures Q4 2015 Q4 2014 Change % 2015 2014 Change %

Traffic data, unit costs and revenue

Passengers, 1,000 2,532 2,273 11.4 10,294 9,630 6.9

Available seat kilometres (ASK), million 7,915 7,395 7.0 31,836 30,889 3.1

Revenue passenger kilometres (RPK), million 6,192 5,744 7.8 25,592 24,772 3.3

Passenger load factor, % 78.2 77.7 0.6 %-p 80.4 80.2 0.2 %-p

Unit revenue per available seat kilometre, (RASK), cents/ASK * 6.30 6.29 0.2 6.35 6.23 2.0

RASK at constant currency, cents/ASK * 6.23 6.29 -1.1 6.17 6.23 -1.0Unit revenue per revenue passenger kilometre (yield), cents/RPK * 6.88 6.78 1.5 6.85 6.65 2.9

Unit cost per available seat kilometre (CASK), cents/ASK * 6.50 6.68 -2.7 6.52 6.53 -0.2

CASK excluding fuel, cents/ASK * 4.81 4.64 3.6 4.67 4.49 3.9

CASK excluding fuel at constant currency, cents/ASK * 4.70 4.64 1.2 4.52 4.49 0.6


Operational result Q4 2014 vs. Q4 2015, M€


Operational result 2014 vs. 2015, M€


Airline Business improved y-o-y

Revenue by quarter, M€ Operational result by quarter, M€


0

100

200

300

400

500

600

700

Q1 Q2 Q3 Q4

2014 2015

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

Q1 Q2 Q3 Q4

2014 2015

Strong result in Travel Services

Revenue by quarter, M€ Operational result by quarter, M€


0

10

20

30

40

50

60

70

80

Q1 Q2 Q3 Q4

2014 2015

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

Q1 Q2 Q3 Q4

2014 2015

Fuel still the largest cost item in Q4, operating expenses increased by 3.8%

23%

17%

14%11%

11%

10%

7%

3% 4% Fuel, 135 M€

Staff costs, 97 M€

Leasing, maintenance, depreciation & impairments, 85 M€

Traffic charges, 63 M€

Ground handling and catering, 67 M€

Other costs, 59 M€

Other rents, 40 M€

Sales and marketing, 20 M€

Expenses for tour operations, 23 M€


Appreciation of USD dampened the decrease of fuel cost throughout the year Q4 2014 vs. Q4 2015 2014 vs. 2015

• Q4 2015 hedging loss 35.9 M€• 2015 hedging loss 136.9 M€


Changes in Balance Sheet; Cash funds and Equity increased

24

Assets, M€ Equity & Liabilities, M€


Q4 Negative net debt, strong balance sheet supports investments


346 333

695 708

0

200

400

600

800

1000

Interest-bearing debt

7x aircraftleases

Cash Adjusted netdebt

Composition of adjusted net debtStrong cash position and improving net cash flow

35.5

-50

45.8

-100

-50

0

50

100

150

2013 2014 2015Equity ratio Gearing Adjusted gearing

171

330448

708

0

150

300

450

600

750

2013 2014 2015

Net operating cash flow Gross investments Divestments Liquid funds

%

M€

Strong balance sheet, negative net debt

M€

Relatively low net capital commitments* for coming years

26

A350 Other investments Net investment Signed SLB A350Signed SLB’ and divestments

Total capital commitments amounted to 1 818 M€ at the end of 2015. Capital commitment for 2016 & 2017 amounted to 745 M€ but when decreasing committed divestments, the net commitment are 356 M€ in total. Finnair Q4 & FY 2015 Result, 10 February 2016

* Excluding other planned, but not yet contractual investments and divestments


Save the Date: Capital Markets Day 25 May 2016HOTT Building, Helsinki Airport

Kiitos


Thank you

29

Fuel and currency sensitivities & currency split

* The sensitivity analysis assumes that the Chinese yuan and the Hong Kong dollar continue to correlate strongly with the US dollar..

Fuel sensitivities 10% change without hedging

10% change, taking hedging into account

Hedging ratio

(rolling 12 months from date of financial statements) H1 2016 H2 2016

Fuel EUR 32 million EUR 14 million 68% 53%

Currency distribution %

10–12 2015

10–122014 2015 2014

Currency sensitivities USD and JPY (rolling 12 months from date of financial statements)

Hedging ratio (rolling 12 months from date of financial statements)

Sales currencies 10% change without hedging

10% change, taking hedging into account

EUR 64 60 59 58 - -

USD* 2 2 3 3 see below see below see below

JPY 7 8 8 9 EUR 18 million EUR 9 million 67%

CNY 5 6 7 7 - -

KRW 2 2 3 3 - -

SEK 5 6 5 5 - -

Other 15 16 15 15 - -

Purchase currencies

EUR 54 52 53 52 - -

USD* 37 41 40 41 EUR 56 million EUR 10 million 81%

Other 9 7 7 7


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