Finnair looks to increase capacity 10% in 2024 despite Q1 losses

Despite registering an operating loss of -€17.2 million ($18.37 million) in the first quarter of 2024, Finnair is looking to increase its total capacity by more than 10% during the year, including utilising wet lease options to augment growth primarily focusing on the Asian and European regions (with leasing options predicted to grow at a “similar pace” to 2023). “This has been a different quarter from an operational perspective,” highlighted current CEO Topi Manner during the company’s earnings call, describing that a negative quarter (following six positive ones) was “always a disappointment”. Citing operational impacts from the ongoing Ukraine conflict (with airspace closures impacting the carrier’s A330 operations) and the impact of snow at Helsinki airport, revenue was also adversely affected by strike action. During the first two-day disruption, only ten of around 250 scheduled services were operated, with around one third of customers receiving a refund rather than an alternative flight; contributing to a total revenue for 2024’s ‘seasonally weakest quarter’ of €681.5 million ($727.69 million). Operating costs for the quarter remained on par despite a capacity increase of 4.4%, with passenger load factor decreasing to 72.1% from last year’s 75.1%. (The total number of customers carried was also down from 2.6 million in Q1 2023 to 2.5 million in Q1 2024.) However, Manner described the airline’s strategic initiatives of cost-cutting measures as now ""paying [proverbial] dividends"". During Q1 2024, Finnair’s net cash flow from operating activities was €138.9 million ($148.31 million), down from €206.8 million ($220.82) in Q1 2023, with its net cash flow from investing activities standing at a loss of -€25.9 million ($27.66 million). Its gross capital expenditure totalled €43.4 million ($46.34), almost half of last year’s first quarter total of €80 million ($85.42 million). However, yield development continues to be strong, explained Finnair, with the upcoming summer season showing “good demand expectation” and customer “buying patterns normalised”. The increase in capacity is being driven by a “more efficient use” of the existing fleet, with Finnair focusing on returning to profitability and refinancing 25 upcoming maturities before fleet renewal decisions are taken (something which will involve approximately half of the carrier’s current narrowbody fleet).