DALLAS – Finnair (AY) has reported a profit for the second quarter (Q2) of 2023 and reinforced its guidance for a solid full-year performance.
The airline announced a comparable operating profit of €66m (US$73m). This compared to a loss of €84m (US$93m) for the same period last year. Revenues were also up 36% to €749m (US$833m). Meanwhile, net profits stood at €139m (US$154m), up from a loss of €280m (US$311m) in Q2 2022.
The profits were thanks to a continued increase in passenger numbers, up 19.4% to 2.8m. Available seat kilometres (ASK) increased by 17.5% to 9,212.8 million kilometres, and passenger load factor stood at 75.3%.
This comes despite the airline being heavily impacted by the closure of Russian airspace, affecting AY’s lucrative routes from Helsinki (HEL) to various Asian destinations. The airline has been filling the void left by losing some of these routes by adding multiple destinations across North America and the Middle East. Finnair has also leased several of its Airbus A330s to Oneworld alliance partner Qantas (QF) on a long-term deal.
Addressing Market Conditions
Discussing the results, AY CEO Topi Manner said, “The strong quarter was driven by continued strong travel demand and successful implementation of Finnair’s strategy. We captured demand with our balanced network and were successful in our pricing and sales efforts. Also our cost control measures are bearing fruit. The net result for the period increased to 138.6 million euros, supported by the re-recognition of previously written down deferred tax assets due to clearly improved profitability and improved longer-term outlook of our business.”
“Over the past year, Finnair has succeeded well in actively addressing the opportunities in the market. Among other things, we have made successful network choices and allocated our capacity profitably, improved sales efficiency by significantly increasing the share of direct distribution, and improved cost efficiency while maintaining our operational excellence. Due to this, also our longer-term outlook has improved, and the specific risks related to the business environment have normalised, as the impacts of the pandemic have faded, and both Finnair and the market have adapted to the closed Russian airspace.
“In June, we announced that we would reach our previous strategic profitability target, i.e. a comparable operating profit margin of at least 5%, 12–18 months earlier than previously estimated. We are now able to raise our strategic profitability target to 6% by the end of 2025. In addition, we intend to call our 200-million-euro hybrid bond in early September. We have also made some updates to our strategy. We are aware that our work is not done, and we continue to implement our strategy in a determined manner.”
Full-year profits are now estimated to be in the region of €150m-€200m (US$166m-US$278m).
Featured Image: OH-LWN Finnair Airbus A350-900 HEL EFHK. Photo: Adrian Nowakowski/Airways.