finnair q3 result info/media/files/f/... · change % 1–9 2014 1–9 2013 change % 2013 turnover,...
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FinnairQ3 result info31 October 2014CEO Pekka VauramoCFO Erno Hildén
1 Finnair Q3 Result, 31 October2014
Difficult market environment especially in Finland prevailed• The weakness of the Finnish economy was reflected in home market demand, in both business
travel and leisure traffic.• Growth in the BRICS economies, including China, slowed.• Several income currencies weakened against Euro.• The price of jet fuel remained high despite its decrease.• Cargo traffic continued to suffer from overcapacity and negative exchange rate development. • Capacity growth in the market was mostly conservative.
– Measured in seat kilometres, market capacity between Helsinki and Finnair’s European destinations grew by approximately one per cent.
– Market capacity between Finnair’s Asian and European destinations grew by 3.3 per cent. – Finnair increased its market share in European traffic, while in Asian traffic market share decreased slightly
year-on-year.*
Finnair Q3 Result, 31 October20142
*Finnair’s estimate 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 websites.
Weak domestic market and exchange rate fluctuations contributed to decline in traffic revenues in Q3
3
North-Atlantic**
ASK -6.0 %
RPK -8.6 %
PLF -2.5 %-p
Traffic revenue* -6.8 %
Charter traffic
ASK -29.9 %
RPK -31.8 %
PLF -2.5 %-p
Traffic revenue* -33.3 %
Europe
ASK 12.1 %
RPK 10.8 %
PLF -0.9 %-p
Traffic revenue* 4.8 %
Total
ASK -0.7 %
RPK -0.5 %
PLF 0.1 %-p
Traffic revenue* -2.8 %
Asia
ASK -3.7 %
RPK -1.2 %
PLF 2.3 %-p
Traffic revenue* -3.6 %
Domestic
ASK -0.1 %
RPK 0.3 %
PLF 0.3 %-p
Traffic revenue* -5.1 %
Cargo
ATK -3.1 %
RTK -0.7 %
OLF 1.7 %-p
Traffic revenue -3.6 %47%
38%
5%4%5%
Asia EuropeDomestic LeisureNorth-Atlantic
Passenger revenue split
*Passenger revenue.**Atlantic Joint Business revenue contribution included.
Finnair Q3 Result, 31 October2014
Agreements reached with crew
• Finnair and the Finnish Airline Pilots’ Association (SLL) reached an agreement bringing 17 million euros in permanent annual savings. – In return, protection against redundancies for
the next two years and an incentive plan.
• Finnair and the Finnish Cabin Crew Union (SLSY) reached a savings agreement that brings 18 million euros in permanent annual savings.– In return, Finnair protection against
redundancies for the next two years, protection from outsourcing, and a pension incentive.
• Savings impact gradually from 2015 onwards
Finnair Q3 Result, 31 October20144
Target 200 M€ permanent cost savings almost reached
Finnair Q3 Result, 31 October20145
Other
Pilots*
Cabin*
Technical & ground services
49
17
18
7
Phase I:140 M€
Phase II: 60 M€
Realised Remaining target
Total target200M€
4
Other employee groupsand other savings 9
Phase I additional + Phase II realised savings
Savings reachedby 30 September
2014 189 M€
8
1
140
*Agreements on savings made, not yet realised
Progress in cost savings did not offset decline in revenues• Turnover 622.7 M€, -2.2% y-o-y
– Weak home market demand– Currency effects
• Operational result 26.7 M€, -37.8% y-o-y
• RASK -1.6%– Excl. Fx, -0.4%
• CASK ex. fuel -0.4%. – CASK –1.3%.
6
Operational result, M€
-50-40-30-20-10
0102030405060
Q1/
10Q
2/10
Q3/
10Q
4/10
Q1/
11Q
2/11
Q3/
11Q
4/11
Q1/
12Q
2/12
Q3/
12Q
4/12
Q1/
13Q
2/13
Q3/
13Q
4/13
Q1/
14Q
2/14
Q3/
14Q
4/14
* Operational result (EBIT), excluding non-recurring items, capital gains and changes in the fair value of derivatives and in the value of foreign currency denominated fleet maintenance reserves.
Finnair Q3 Result, 31 October2014
Focus on pursuing additional revenue with A350s and product upgrades
Signature meals and newbuy onboard menu, Sky
Bistro
Lounge renewals New In-flightentertainment system
Full flat seats
7
Wireless on-board Airbus 350 XWBNew Economy Comfort package
Finnair Q3 Result, 31 October2014
Outlook* for 2014 unchanged
Finnair estimates:
• Its turnover in 2014 to be significantly lower than in 2013.
• Fuel costs are expected to remain high.
• Due to delays in the personnel cost reduction negotiations and the decline in unit revenue, 2014 operational result will show a significant loss.
*The full outlook can be found from interim report 1 January – 30 June 2014
Finnair Q3 Result, 31 October20148
Finnair Q3 Result, 31 October20149
Financials
Key figures Q3 2014 Q3 2013 Change%
Q1-Q3 2014
Q1-Q3 2013
Change %
2013
Turnover and resultTurnover, EUR million 622.7 636.9 -2.2 1,731.8 1,839.8 -5.9 2,400.3Operational result, EBIT, EUR million * 26.7 43.0 -37.8 -27.1 33.0 -182.2 11.9Operational result, % of turnover 4.3 6.8 -2,5 %-p -1.6 1.8 -3,4 %-p 0.5Operating result, EBIT, EUR million 23.6 39.8 -40.7 -31.1 15.8 <-200 % 7.9Operational EBITDAR, EUR million 80.1 91.4 -12.3 133.1 182.1 -26.9 210.1Result before taxes, EUR million 21.2 35.9 -40.9 -43.7 40.0 <-200 % 26.8Net result, EUR million 16.6 27.0 -38.3 -35.4 29.4 <-200 % 22.9Balance sheet and cash flowGross investment, EUR million 15.3 12.6 21.6 68.4 50.7 34.8 77.3Net cash flow from operating activities, EUR million -8.9 38.7 -122.9 39.8 128.4 -69.0 142.4ShareShare price at the end of quarter, EUR 2.50 3.12 2.77Earnings per share from the result of the period, EUR ** 0.13 0.21 -38.4 -0.28 0.23 <-200 % 0.18Earnings per share, EUR 0.11 0.19 -39.8 -0.33 0.16 <-200 % 0.11
Finnair Q3 Result, 31 October201410
Key figures
* * Before Hybrid Bond interest
Operational result, M€, Q3 2013 vs. Q3 2014
Finnair Q3 Result, 31 October201411
43.0
26.7
0.9
-7.8
-5.8
0.3 -1.10.3
7.9
-8.4
-0.8-2.5
0.6
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Revenue, M€, Q3 2013 vs. Q3 2014
Finnair Q3 Result, 31 October201412
0.4 0.3
-6.1
-16.0
-14.0
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
Other revenue Cargo revenue Travel Services Traffic revenue TOTAL DEV.
-8.4
-13.8
Segment results: Airline Business*
Key figures 7–92014
7–92013
Change %
1–9 2014
1–9 2013
Change % 2013
Turnover, EUR million596.2 609.5 -2.2 1,645.7 1,745.0 -5.7 2,271.9
Operational result, EUR million 25.9 43.1 -39.9 -29.3 30.7 -195.5 8.8Average number of employees 4,400 4,883 -9.9 4,834
Finnair Q3 Result, 31 October201413
73 %
14 %
10 % 3 %
Airline Business turnover 596.2 M€
Scheduled traffic OtherCargo Charter traffic
Scheduled traffic development in Q3• Capacity decreased in all traffic categories except Europe.• Passenger unit revenues decreased in all traffic areas, mainly due to currency
effects.
* Includes from 1 Jan 2014 onward aircraft maintenance, Finnair Travel Retail Oy and Finnair’sproperty holdings and the management of properties related to the company’s operational activities.
Airline business: Q3 RASK & CASK development
-1.6 %
-1.3 %
-0.4 %
-3.1 %
3.8 %
-7.9 %
1.0 %-3.8 %
9.5 %
-2.2 %0.5 %
-10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10%
RASK, unit revenue
CASK, unit cost
CASK, excl. Fuel
Fuel cost
Staff cost
Depreciation & lease costs
Traffic charges
Maintenance
Ground handling
Catering
Other expenses
Change, %
14 Finnair Q3 Result, 31 October2014
• Unit cost excluding fuel (CASK. excl. fuel) -0.4%• Unit revenue (RASK) at constant currency -0.4%
Segment result: Travel Services
Finnair Q3 Result, 31 October201415
• The weakness of the Finnish economy was reflected in home market demand, in both business travel and leisure traffic.
• Consumers’ uncertainty was reflected in the demand for leisure travel
Key figures 7–92014
7–92013
Change %
1–9 2014
1–9 2013
Change % 2013
Turnover, EUR million44.4 50.1 -11.3 161.2 183.2 -12.0 251.7
Operational result, EUR million 0.8 -0.1 >200 2.2 2.3 -2.9 3.1Average number of employees 669 761 -12.1 751
Operating costs 600 M€ Fuel largest cost item
Finnair Q3 Result, 31 October201416
Change, %
9.8 %
-10.9 %
52.4 %-4.6 %
-1.1 %
-6.5 %
6.4 %
1.8 %
-0.9 %
1.0 %
-4.3 %
0.4 %
-20% 0% 20% 40% 60%
Other costs
Sales and Marketing
Leasing
Tour operators
Maintenance
Depreciation
Other rental payments
Traffic charges
Ground handling and catering
Staff costs
Fuel
Total
30%
14%
11%
10%
9%
7%
5%
5%
4% 3% 3%
Fuel Staff costsGround handling and catering Traffic chargesOther costs Other rental paymentsDepreciation MaintenanceLeasing Tour operationsSales and marketing
Fuel, spot-price development
Finnair Q3 Result, 31 October201417
58 %
10 %
6 %
5 %
4 %
18 %
EUR YEN CNY SEK USD Other
49%
12%
10%
4%
4%
21%
EUR JPY CNY USD SEK Other currencies
Revenue currency split
Revenue currencies Q3 2014
18 Finnair Q3 Result, 31 October201418
Revenue currencies 2013
Airbus fleetThe first four A350s arrive in H2 2015
19
9 AIRBUS A319 11 AIRBUS A321
8 AIRBUS A3307 AIRBUS A340
10 AIRBUS A320
Finnair Q3 Result, 31 October2014
H2 2015 onwards: AIRBUS A350 XWB• First four by the end of 2015• Next 7 firm orders by the end of 2017
Strong financial position supports business development and future investments
-20
0
20
40
60
80
100
120
2010 2011 2012 2013 Q3 2014
Strong balance sheet
Equity ratioGearingAdjusted gearing
%
Finnair Q3 Result, 31 October201420
-150
0
150
300
450
600
2010 2011 2012 2013 Q1-Q32014
Good cash position
Net cash flow from operationsInvestments, grossShort term cash and cash equivalents
M€
Fuel cost build up
Finnair Q3 Result, 31 October201421
• Q3/13 hedging loss 2,6 M€
• Q3/14 hedging loss 1,7 M€
Comparable Q3 fuel cost, M€
186 177
0.5%-4.5% 0.0% -0.5%
1 -1-8 0
0
20
40
60
80
100
120
140
160
180
200
Q3/2013 Volume Price Currency Hedgingdeviation
Q3/2014
Rolling hedging policy
Finnair Q3 Result, 31 October201422
Hedging positions as of 30 September 2014Hedging ratio 2014: 75%
• Finnair hedges jet fuel consumption 24 months ahead within the limits defined in the hedging policy.
• Finnair’s fuel purchases are 72% hedged for the H1 and 50% for the H2 of 2015.
• The company protects itself against the risks of currency, interest rate and jet fuel positions by using different derivative instruments, such as forward contracts, swaps and options.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
hedge ratio
upper
lower
Thank you
23 Finnair Q3 Result, 31 October2014