Finnair has reported a 63% increase in revenues for April-June 2021 period to €111.8 million, with a comparable operating loss of €151.3 million. Finnair had €834.3 million in cash and an equity ratio of 18.9%.
Net cash flow from operating activities was €-59.3 million and net cash flow from investing activities was €13.8 million.
The airline stated that cost adjustment and financing measures continued while it was preparing for a traffic restart. As travel restrictions are reduced, demand is expected to increase gradually during the fall, said Finnair.
The number of passengers carried during the quarter increased by 197.6% to 0.3 million, with a 311.6% increase in available seat kilometres (ASK). Passenger load factor (PLF) was 30.6% (33.1).
For the half year period to end June 2021, Finnair’s revenue decreased by 64.2% to €225.4 million, with a comparable operating loss of €294.5 million.
Net cash flow from operating activities was €-177.0 million and net cash flow from investing activities was €19.0 million. Finnair’s number of passengers decreased by 80.0% to 0.6 million, on the back of a 73.8% decline in ASK declined. PLF was 28.3%.
Because travel restrictions have been lifted at a slower pace than expected and, therefore, the recovery in demand has also been delayed, Finnair states that it expects demand to increase gradually during the fall 2021 as now Finland is also opening to travel. The company estimates that the monthly operating cash flow will turn positive by the end of the year 2021.
The travel restrictions will, however, continue to have a softening impact on demand especially in Asia, which is expected to open to travellers some months later than Europe. Due to the travel restrictions and incremental costs caused by the increased capacity, Finnair expects the comparable operating loss in Q3 2021 will be of a similar magnitude as in the five previous quarters despite the gradual increase in revenue.
As a result of the pandemic situation, inclusive of virus variants, visibility remains weak and there are several scenarios of the timing of the recovery and as a result Finnair is not providing guidance on full year 2021 revenue.
“The pandemic and related travel restrictions continued to heavily impact Finnair’s passenger numbers, revenue and result during the second quarter,” said CEO Topi Manner. “We continued to operate a limited network, adding flights as demand evolved when European countries started to open for travel. In addition to the New York route opened in the spring, we re-introduced our services to Chicago and Los Angeles after a break of over one year.”
Finnair also reports that cargo demand remained strong due and the airline flew 522 cargo-only flights in the reporting period. Cargo continued to account for more than half of Finnair revenue, even though passenger revenue surpassed cargo revenue again in June.
Finnair has continued raising funds during the period by refinancing its €200million bond, doubling its size to €400 million. “Thanks to this transaction, we maintain a healthy balance sheet and cash reserves, and can thus focus fully on re-starting our traffic,” said Manner.
On 20 May 2020, Finnair announced that it was targeting nearly €80 million in permanent cost base reductions by 2022, compared to 2019 levels. The airline later updated this target to €170 million. Finnair reports that it has made good progress in the cost savings programme and will reach this target “ahead of the schedule”. Finnair is also targeting permanent reductions of c. €200 million in its cost base by 2022, based on 2019 operational volumes, of which c. €125 million are volume-driven and c. €75 million are fixed costs.
“Our cost programme, which targets permanent cost savings from the start of the year 2022, proceeded well, and we will clearly exceed our earlier target of €170 million. We now target savings of up to €200 million measured with 2019 operational volumes. We continue to strive for cost efficiency in all our operations, which is necessary in the highly competitive post-pandemic market.”
Finnair’s traffic plan for the autumn and winter includes some 70 destinations. “Our target is to utilise opportunities in the market and we will launch totally new long-haul flights from Stockholm to Florida and Thailand. These flights create jobs for some 270 Finns and strengthen our offering in the important Swedish market.”