FINNAIR GROUP INTERIM REPORT JANUARY 1 MARCH 31, 2011

Transcription

1 FINNAIR GROUP INTERIM REPORT JANUARY 1 MARCH 31, huhtikuuta Key Facts from the First Quarter 1

2 Industry continues on growth track Air Traffic on the rise: IATA estimate for the capacity growth 6%* in 2011 Weak Net Profit Margins expected (1.4 %) External disturbances and overcapacity have a negative effect on the load factors, the fuel cost increase cannot be transferred to ticket prices Finnair Q1 traffic +12.1% (ASK): Asian traffic grew 20.2% (ASK) Asian traffic revenue +23% Global corporate sales +19%, outside Finland +43% Finnair Passenger load factor 72.6% Q Strike continued to have an effect on Asian leisure demand during Q1 Events in Japan, Middle East and Africa affected strongly on the Q1 sales Cargo continued to develop positively, revenue up by 57% * compared with previous year Traffic Region Development Q vs. Q North Atlantic ASK 15,1 % RPK 9,6 % PLF% -3,7 %-p Traffic revenue 18,8 % Europe ASK 9,7 % RPK -0,8 % PLF% -6,4 %-p Traffic revenue 0,4 % Asia ASK 20,2 % RPK 5,0 % PLF% -10,7 %-p Traffic revenue 22,9 % Leisure traffic ASK -3,1 % RPK -3,8 % PLF% -0,7 %-p Traffic revenue -2,3 % Domestic ASK 20,0 % RPK 5,1 % PLF% -7,6 %-p Traffic revenue 9,6 % Total ASK 12,1 % RPK 1,7 % PLF% -7,4 %-p Traffic revenue 9,4 % Cargo ATK 62,4 % RTK 42,5 % CLF% -8,7 %-p Traffic revenue 57,0 % 2

3 We are Investing in Growth and Partnerships Singapore route launch in May 2011; outlook positive We are developing our cooperation in feeder fraffic and cargo to enable growth and to increase cost efficiency Air Berlin cooperation had a good start In Finncomm Airlines partnership arrangements we are seeking a solution in cooperation with an industry partner American Airlines Chicago route launch in May 2011 Kingfisher connections in India Qantas/Jetstar offers connections to Australia and New Zealand from our Asian flights Cargo Joint Venture cost-efficient cargo capacity from Helsinki to long-haul destinations at the end of the year We will continue to improve productivity and invest in service expertise In our operations, we will focus on business growth areas Cost-efficiency and additional capacity in European traffic with Airbus A32S cabin retrofit and higher fleet load factor Catering: industry review of alternative cooperation solutions Operational efficiencies through process development projects Improved efficiency in purchasing Significant service-expertise training and development programme under way 3

4 Finnair is a quality airline We are the leading European airline in level of customer service; customer satisfaction still rising Our operational quality is top class, punctuality has returned to a good level, operational quality indicators have improved all along the line Competitive advantage from customer service: status of most desired airline in Asia-Europe traffic the goal We are developing our service culture and sharpening our service identity Key figures January - March 2011 vs mill. EUR Q Q vs. PY FY 2010 Turnover 533,7 481,5 10,8 % 2 023,3 Operational result, EBIT -43,1-26,3-63,8 % -4,7 Operational result, EBIT, % of turnover -8,1 % -5,5 % -2,6 %-p -0,2 % EBIT -43,1-25,9-66,4 % -13,3 Net profit -33,8-21,7-56,2 % -22,8 Capital expenditure (gross) 30,9 68,7-55,1 % 183,5 4

5 Jet fuel spot + fwd curve Cost Structure Q Fuel 23 % Personnel 20 % Other Costs 10 % Traffic Charges 9 % Depreciation and Leasing 7 % Groundhandling and Catering 7% Tour operator costs 7% Other Rents 5% Maintenance 5% Sales and Marketing 4% 5

6 Headcount in decline Number of Employees Average number of employees Q Restructuring of technical services In the restructuring the company discontinues the heavily lossmaking aircraft base maintenance service offered to external customers Service provision will in future be focused on line maintenance of the company s own aircraft Employee consultations within Finnair Technical Services were completed at the end of March, a reduction of 450 jobs will be implemented by the end of the year As part of the restructuring, a letter of intent signed on a possible transfer of business of warehouse services The first-quarter results include a non-recurring personnel expense item of 18.4 million euros for the restructuring 6

7 Development of operating expenses per ASK, Airline, Change Quarter vs. Quarter c ASK Change % RASK, tuotto revenue per per ASK CASK, cost kustannus per ASK per ASK CASK ilman excl. Fuel pa. -1,3-0,1-2,5 Polttoaine Fuel 7,4 Henkilöstökustannus Staff costs Liikennöimismaksut Traffic charges Maapalvelu- Ground handling ja catering-kulut & exp. Poistot Depreciation ja leasing-maksut & lease expenses -2,5-1,1-8,0-6,9 Muut Other kulut expenses 1,3 Change % Q vs. Q Strong balance sheet Equity ratio and adjusted gearing % 120 Omavaraisuusaste Oikaistu nettovelkaantumisaste, Adjusted Gearing , , Q

8 Strategy From Vision to Implementation Finnair s vision 2020 Finnair s vision is to be number one in the Nordic countries The most desired option in Asian traffic, in the transit traffic between Asia and Europe among the three largest Significance of Scandinavia as part of domestic market is growing Our growth strategy is based on costcompetitiveness, our success factors are quality, freshness and creativity 8

9 74 Weekly Departures to Asia in the Summer New York Tokio 7 Nagoya 7 Osaka 7 Soul 7 Peking 7 Shanghai 7 Hong Kong 12 Bangkok 7 Singapore 7 Delhi 6 New destinations and additional flights in European summer season Route to Aarhuus opened in cooperation with Sun-Air Malaga and Toronto become scheduled services, five flights per week Nice becomes scheduled service, three flights per week Four flights per week to Ljubljana Daily connection to Gdansk Krakow twice per week Venice three times per week Stuttgart service increased to two flights per day Lissabon three flights per week Service to Pisa starts on May 13, two flights per week Three flights per week to Bergen via Arlanda from May 22 Three flights per week to Murmansk in summer from 15 June 9

10 Outlook for the Year 2011 Finnair expects that the second-quarter result will be negative The results of the second half of the year expected to be positive Turnover expected to grow by more than 10% in the full year Finnair will continue measures aimed at restoring operational profitability and will explore new means of increasing cost-efficiency Thank You 10

11 Operating profit* by quarter Milj. EUR Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q * excl. capital gains, fair value changes of derivatives, changes in the exchange rates of overhauls and non-recurring items Result Q vs. Q Mill. EUR Q Q Change % Turnover 533,7 481,5 10,8 Operating expenses 580,8 511,1 13,6 Profit before depreciation and lease payments, EBITDAR* 3,6 20,0-82,0 EBIT excl. asset sales, hedging & arrangements -43,1-26,3 Capital gains and non-recurring items -19,6 0,0 Fair value changes of derivates and changes in the exchange rates of overhauls 19,6 0,4 Operating profit (EBIT) -43,1-25,9 Profit before taxes -46,2-29,4 *excl. capital gains, non-recurring items and fair value changes of derivatives and changes in the exchange rates of overhauls 11

12 Asia Representing Majority of Scheduled Traffic Domestic 7 % Europe 29 % Asia 58 % North Atlantic 6 % Revenue Passenger Kilometers Q Over a Half of Traffic Revenue from Asia in Scheduled Traffic (Q1/11) 5 % Domestic 13 % Europe Asia US 47 % Aasia- Eurooppa Aasia- Via Eurooppa Helsinki >50 >60 % 35 % * Cargo revenue about 20 % of Asian traffic revenue total 12

13 Finnair Group 2010 Q1 EBIT* to 2011 Q1 EBIT* build up 40,0 30,0 20,0 10,0 0,0 20,6 5,7-2,2-3,7-4,0-4,9-6,1-10,3-43,1-10,0-20,0-26,3 26,6-27,4-43,1-30,0-40,0-11,2-50,0 2010Q1 EBIT * Operating EBIT Traffic revenue Cargo revenue Other revenue Maintenance Ground Handling & Catering Tour ops. Expenses Salaries Traffic Charges Other rents Fuel Other exp. 2011Q1 EBIT Development of operating expenses, Finnair Group, Quarter vs. Quarter Mill. EUR Change % Operating expenses Operating expenses excl. Fuel +69,8 +42,3 13,6 10,4 Fuel +27,4 26,1 Staff costs +4,9 4,4 Traffic charges Ground handling & catering exp. Expenses for tour operators Depreciation & lease expenses Other expenses +6,1 +3,7 +4,0 +0,4 +23,3 13,7 9,0 10,6 0,8 18,7 Change % Q vs. Q

14 Development of operating expenses per ASK, Airline, Change Quarter vs. Quarter c ASK Change % RASK, tuotto revenue per per ASK CASK, cost kustannus per ASK per ASK CASK ilman excl. Fuel pa. -1,3-0,1-2,5 Polttoaine Fuel 7,4 Henkilöstökustannus Staff costs Liikennöimismaksut Traffic charges Maapalvelu- Ground handling ja catering-kulut & exp. Poistot Depreciation ja leasing-maksut & lease expenses -2,5-1,1-8,0-6,9 Muut Other kulut expenses 1,3 Change % Q vs. Q Airbus A32S Cabin Configuration Retrofit Increased Capacity and Productivity Airbus A319 From 123 to 138 seats +12.2% capacity -10.8% unit cost reduction Airbus A320 From 159 to 165 seats +3,8 % capacity -3,6 unit cost reduction 14

15 Key figures of the business segments Q vs. Q in m EUR Airline Business Aviation Services Travel Services Turnover 452,3 114,5 106,6 (vs. PY) 12,2 % 3,5 % 6,5 % Operating result -43,9 2,8 1,1 (vs. PY) -78,5 % 75,0 % 175,0 % Adj. op. margin -39,9-15,6 1,1 (vs. PY) 52,9% <-200 % 175,0 EBITDA -19,2 7,5 1,3 (vs. PY) <200 % 34,4 % 93,7 % Key figures January - March 2011 vs Change % Equity ratio % 34,7 34,6 0,1 %-p 36,2 Return on equity (ROE) %, rolling 12 months -4,2-13,4 9,2 %-p -2,7 ROCE %, rolling 12 months -1,5-8,3 6,8 %-p -0,4 WACC % 8,0 8,25-0,3 %-p 8,00 Gearing % 30,0 30,2-0,2 %-p 27,8 Adjusted gearing % 80,6 91,9-11,3 %-p 79,6 Liquid assets per revenue (12 months rolling) % 24 % 29 % -0,1 %-p 26 % Interest bearing debt, net, mill. EUR 253,4 251,4 0,8 % 235,1 Market capitalisation, mill. EUR 492,0 557,4-11,7 % 645,8 Share price, EUR 3,84 4,35-11,7 % 5,04 15

16 Cashflow from operating activites Q vs. Q Cashflow statement EUR million Cashflow from operating activities Q Q Cash from investing activities Fixed asset investments Change in advances Cashflow from financing activities Liquid funds at beginning Change Liquid funds at end Return on equity and capital employed rolling 12 months % 20 ROE return on equity ROCE return on capital employed Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q % -4.2% 16

17 Capital expenditure and net operational cashflow EUR million 400 Net operational cashflow Capital expenditure Q Q Aircraft operating lease liabilities Milj. EUR , Q On 31 March all leases were operating leases. If capitalised using the common method of multiplying annual aircraft lease payments by seven, the adjusted gearing on 31 December 2010 would have been 80,6 % 17

18 Rolling Hedging Policy 100% 80% hedge ratio upper lower 60% 40% 20% 0% 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 Change in fuel costs Q EUR million * 132** 0 Q1/2010 Amount Price Foreign currency Hedgings Q1/2011 * Includes EUR 12 million hedging loss **Includes EUR 12 million hedging profit 18

19 Crude oil speculative positioning on stronger oil is at all time high Crude oil futures positions in CME Source: Danske Markets Capacity, Passenger volume and Load Factor development Q1 y-o-y Airline Capacity Change Passenger volume change Load Factor change Finnair 12,10 % 1,70 % -7,40 % IAG 11,50 % 8,80 % -1,90 % British Airways 13,90 % 11,90 % -1,9 % Iberia 6,20 % 2,70 % Cathay Pacific 9,80 % -1,60 % -8,80 % SAS 7,60 % 0,20 % -5 % Lufthansa 7,50 % 0,30 % -5,30 % Singapore Airlines 6,40 % -3,60 % -7,60 % Air France-KLM 3,50 % 1,00 % -1,90 % Norwegian 27 % 22 % -3 % Easyjet n. 12 % 11,90 % Ryanair 8 % 8 % - 19

20 Finnair s financial targets Sustainable, value-creating growth Operating profit EBITDAR Financial added value Adjusted gearing Dividend ratio Operating profit margin at least 6% => over 120 milj. EUR EBITDAR % at least 17% => over EUR 350 million EBITDAR Target is to generate positive financial added value over 8.25 % pre-tax WACC Gearing adjusted for aircraft lease liabilities not to exceed 140% At least one third of annual profit to be paid as dividend 20