Finnair Q2 result info

Transcription

1 Finnair Q2 result info 15 August 2014 CEO Pekka Vauramo CFO Erno Hildén 1

2 Product upgrades: Customers spoke, we listened Signature meals and new buy onboard menu, Sky Bistro Lounge renewals New In-flight entertainment system Full flat seats 2 New Economy Comfort package Wireless on-board Airbus 350 XWB

3 Q result 3

4 Difficult market environment especially in Finland 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. Negative exchange rate development of several income currencies. The price of jet fuel remained high despite its slight 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 9.2 per cent. Market capacity between Finnair s Asian and European destinations grew by some 2.8 per cent. Finnair increased its market share in European traffic, while in Asian traffic market share remained largely unchanged from the comparison period.* 4 *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.

5 Passenger load factor 79.5%. The weak domestic market, contraction of charter traffic and exchange rate fluctuations contributed to decline in revenues North-Atlantic** ASK -11,3 % RPK -4,8 % PLF 6,2 %-p Traffic revenue* -8,4 % Europe ASK 11,6 % RPK 14,3 % PLF 1,9 %-p Traffic revenue* 0,4 % Domestic ASK 3,0 % RPK 4,9 % PLF 1,2 %-p Traffic revenue* -5,3 % Asia ASK -0,4 % RPK 1,4 % PLF 1,4 %-p Traffic revenue* -7,3 % Passenger revenue split 5% 4% 8% 42% Charter traffic ASK -31,0 % RPK -32,5 % PLF -1,8 %-p Traffic revenue* -34,3 % Total ASK 0,5 % RPK 2,2 % PLF 1,3 %-p Traffic revenue* -6,0 % Cargo ATK 1,1 % RTK 3,0 % OLF 1,2 %-p Traffic revenue 1,2 % 42% Asia Domestic North-Atlantic Europe Leisure *Passenger revenue. **Atlantic Joint Business revenue contribution included. 5

6 Status of savings negotiations and employee consultations Employee consultation negotiations in admin and support functions concluded Total reduction of approximately 100 FTE's Company specific agreements achieved with the Finnish Aviation Union IAU Cabin crew outsourcing plans proceed Total of approximately 540 FTE's in the current scope. An agreement on wage structure renewal achieved with the Finnish Airline Pilots' Association (SLL), deadline for final agreement is 7 September

7 Target 200 M permanent cost savings and cost competitiveness in all cost categories Phase I:140 M Savings reached by 30 June M Total target 200M Other Phase II: 60 M Pilots 17 Cabin 18 Technical & ground services 1 7 Other employee groups 5 12 Realised Phase I additional + Phase II realised savings Remaining target 7

8 Progress in cost savings didn t offset decline in revenues Turnover M, -7.2% a slight decrease in overall capacity, continued strong contraction in charter traffic volume, Asian traffic revenue decline mainly due to exchange rate fluctuations, External turnover loss, and a decline in home market demand, particularly in business travel. Operational result M, -<-200 % RASK -5.8% Excluding the effect of exchange rate fluctuations, passenger unit revenue declined by 3.8% CASK ex. fuel -2.4%. CASK 2.4%. Necessary to improve profitability Change from Q RASK= Revenue per Available Seat Kilometre. CASK = Cost per Available Seat Kilometre. 8

9 Turnover and operational result declined y-o-y Turnover, M Operational result, M Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/ Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 * 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.

10 Outlook* for 2014 updated: Finnair estimates: Its turnover in 2014 to be significantly lower than in 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

11 Financials 11

12 Key figures Key figures Q Q Change % Q1-Q Q1-Q Change % Turnover and result Turnover, EUR million 565,7 609,7-7, , ,9-7, ,3 Operational result, EBIT, EUR million * -19,6 7,5 <-200 % -53,9-10,0 <-200 % 11,9 Operational result, % of turnover -3,5 1,2-4.7 %-p -4,9-0,8-4.0 %-p 0,5 Operating result, EBIT, EUR million -26,3-10,4-152,6-54,7-24,0-127,6 7,9 Operational EBITDAR, EUR million 35,5 57,4-38,1 53,0 90,7-41,6 210,1 Result before taxes, EUR million -31,0 22,6 <-200 % -64,9 4,1 <-200 % 26,8 Net result, EUR million -23,9 18,1 <-200 % -52,0 2,4 <-200 % 22,9 Balance sheet and cash flow Gross investment, EUR million 19,9 14,0 42,5 53,0 38,1 39,1 77,3 Net cash flow from operating activities, EUR million 69,2 101,2-31,6 48,7 89,7-45,7 142,4 Share Share price at the end of quarter, EUR 2,84 2,70 2,77 Earnings per share from the result of the period, EUR ** -0,19 0,14 <-200 % -0,41 0,02 <-200 % 0,18 Earnings per share, EUR -0,20 0,12 <-200 % -0,44-0,03 <-200 % 0, * * Before Hybrid Bond interest

13 Q vs. Q Operational result, M 50,0 40,0 30,0 20,0 10,0 0,0 7,5 14,2 5,4 4,1 3,2 3,2 0,6-1,1-2,6-11,4-21,4-10,0-21,4-19,6-20,0-30,0 13

14 Q vs. Q revenue, M ,1-10,1-11,3-43, , Cargo revenue Travel Services Other revenue Traffic revenue TOTAL DEV. 14

15 Segment results: Airline Business* Airline Business turnover M Key figures Change % Change % % 4 % Turnover, EUR million , , , % Operational result, EUR million Average number of employees <200% <200% 8.8 4,450 4, ,834 Scheduled traffic Cargo Scheduled traffic development in Q2 Capacity grew in Europe and Domestic traffic, revenue passenger kilometres increased in all traffic areas except in North Atlantic. Passenger unit revenues decreased in all areas except in North Atlantic. 72 % Other Charter traffic * Includes from 1 Jan 2014 onward aircraft maintenance, Finnair Travel Retail Oy and Finnair s property holdings and the management of properties related to the company s operational activities. 15

16 Charter traffic and Cargo development in Q2 Charter traffic Consumers uncertainty depressed the overall demand for leisure travel. Purchases by external tour operators declined substantially y-o-y. Structural shift where most popular charter routes will or already have been changed into scheduled services continues Improving cost competitiveness extremely important. Cargo Overcapacity in the cargo market continues to depress yields. Exchange rate fluctuations weakened the result, only 30% of cargo revenue in euros. Belly cargo accounted for approx. 17% of total long-haul revenue. Early signs of a recovery in demand. 16

17 Airline business: Q2 RASK & CASK development Unit cost excluding fuel (CASK. excl. fuel) -2.4% Unit revenue (RASK) at constant currency -3.8% Change, % -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% RASK, unit revenue CASK, unit cost CASK, excl. Fuel Fuel cost Staff cost Depreciation & lease costs Traffic charges Maintenance Ground handling Catering Other expenses -5,8 % -2,4 % -2,4 % -2,5 % -4,5 % -7,5 % -2,2 % -4,3 % -3,0 % -6,8 % 5,7 % 17

18 Segment result: Travel Services Key figures Change % Change % 2013 Turnover, EUR million Operational result, EUR million Average number of employees >200% 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 a larger share of the package tours was sold at a discount at the last minute, which decreased the unit revenue of package travel. 18

19 Operating costs M Fuel largest cost item 3% 3% 2% Change, % 5% 6% 28% Total Fuel Staff costs -2,8 % -3,2 % -14,2 % 7% Ground handling and catering -6,4 % 10% Traffic charges -1,0 % 15% Other rental payments 7,1 % 10% Depreciation -2,3 % 10% Fleet materials and overhaul -9,7 % Fuel Ground handling and catering Traffic charges Depreciation Lease payment for aircraft Expenses for tour operators Staff costs Other expenses Other rental payments Fleet materials and overhaul Sales and marketing Expenses for tour operators -17,9 % Lease payment for aircraft 42,9 % Sales and Marketing -1,1 % Other expenses 12,1 % -30% -20% -10% 0% 10% 20% 30% 40% 50% 19

20 Fuel, spot-price development 20

21 Revenue currency split Revenue currencies Q Revenue currencies % 18 % 3% 4 % 5% 7% 55% 5 % 6 % 58 % 10% 10 % EUR JPY CNY SEK KRW Other currencies EUR YEN CNY SEK USD Other 21 21

22 Airbus fleet The first four A350s arrive in H AIRBUS A AIRBUS A AIRBUS A321 8 AIRBUS A330 7 AIRBUS A340 H onwards: AIRBUS A350 XWB First four by the end of 2015 Next 7 firm orders by the end of

23 Strong financial position supports business development and future investments % 120 Strong balance sheet M 600 Good cash position Q Q Equity ratio Gearing Adjusted gearing Net cash flow from operations Investments, gross Short term cash and cash equivalents

24 Fuel cost build up Comparable Q2 fuel cost, M M % 0.5% -4.6% 0.5% Q2/2013 Volume Price Currency Hedging deviation Q2/2014 Q2/13 incl. A hedging loss of 3.6 M Q2/14 incl. A hedging loss of 4.5 M 24

25 Rolling hedging policy Hedging positions as of 30 June 2014 Hedging ratio 2014: 75% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% hedge ratio upper lower Finnair hedges jet fuel consumption 24 months ahead within the limits defined in the hedging policy. Finnair s fuel purchases are 55% hedged for the H2 and 32% for the H1 of 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. 25

26 Thank you 26