Finnairâs start to the year was very difficult and heavy due to pilot industrial action and the rise in several cost items, with the Q1 loss practically ruining the current yearâs result. We significantly cut our forecasts for the current year and the coming years, especially in relation to industrial action and recently increased macro risks. In addition, we slightly raised our required rate of return related to the latter factor. In our view, Finnairâs expected return remains below the required rate of return over a one-year horizon.
Quoted from the report:
Debt level is below the companyâs target level
Finnairâs cash at the end of Q1 was a solid 0.9 billion euros, which is sufficient for operating the business. The companyâs net debt/EBITDA ratio remained below the target at 1.9x (vs. target below 2x). Thus, in our opinion, the companyâs financial position is reasonable, and the balance sheet has not significantly increased the shareâs risk level since the Q4â23 rights issue.
Finnairâs early 2025 made for chilling reading: an operating loss of 62.6 million euros, a 17% collapse in share price, and the effects of industrial action extending far into the future. In this video, I go through the harsh figures of Finnairâs Q1 results, analyze the underlying problems â and assess whether the company still has hope of recovering from the crisis. Is it temporary turbulence â or is Finnairâs plane already heading for an uncontrolled dive?
Post-Vappu greetings from Finnair! The Q1 results day and the day after were spent by yours truly on a sickbed, so this blog update is coming a bit late. But better late than never, right?
The latest blog post still provides a recap of the key messages from the results report, as well as answers to, for example, what constituted the negative impact on results caused by industrial action and what is behind the increased navigation and landing fees.
Finnairâs only competitive advantage, being geographically at a dead end, collapsed as the war in Ukraine escalated and Asia is no longer easily accessible
The state owner is grasping for dividends with one hand, and with the other, SAF (Sustainable Aviation Fuel) is being pushed into aircraft fuel tanks, which costs a fortune
Even new planes would periodically require more money to be invested
Somehow, this doesnât seem like a very functional concept
Good morning from Finnair! April traffic figures are now public. Revenue Passenger Kilometers increased by 10.5% as capacity grew by 5.9%. Thus, the passenger load factor increased by 3.1 percentage points. The figures were supported by Easter falling in April this year, although industrial actions continued to hamper operations.
Additionally, as good news, the Finnish Air Line Pilotsâ Association announced yesterday that it is suspending all its industrial actions for the time being.
IATA slightly trimmed the airline industryâs profit outlook.
The IATA industry body now expects global airlines to post a combined profit of $36.0 billion this year, down slightly from a previous forecast of $36.6 billion in December, before U.S. President Donald Trump took office. He has since launched a trade war and tightened enforcement of U.S. border controls.
But airline profits are still set to rise from $32.4 billion last year, helped by lower oil prices and record passenger numbers.
âIATA slightly trimmed the airline industryâs profit outlook.â
And Finnair is still doing significant harm to its own profit outlook.
The threshold for cancelling flights is low when negotiations donât reach a resolution.
No major concessions are required from Finnair, but theyâd rather keep planes on the ground and passengers on other airlinesâ planes.
I myself was stranded in Germany without a flight to Finland when Finnair cancelled it.
Indeed, re-routing for the next day is a meager solution.
These messes have long-lasting consequences. Especially domestically, one cannot trust Finnairâs flights at all.
The use of taxpayer money for cancelled flights should be stopped ASAP.
Antti and Kaisa have prepared a comprehensive report on Finnair, and like their other extensive reports, it is available for everyone to read.
Having left the double crisis behind, Finnair will soon embark on a new strategic period, during which we expect the company to pursue moderate growth, a slight improvement in profitability, and initiate investments in its narrow-body fleet. However, Finnair still has plenty to prove in terms of creating economic added value (ROCE-% > WACC-%) for shareholders. In our opinion, the forecasted earnings improvement from the subdued level of the rolling 12 months is adequately reflected in the share price, considering the overall picture of valuation methods, so we reiterate our reduce recommendation for Finnair. However, we revise the companyâs target price to 2.70 euros (previously 2.50 âŹ) reflecting recent forecast upgrades.
May traffic data was published a moment ago. Passenger numbers rose to over one million, and the passenger load factor improved by 1.1 percentage points. Capacity increased by 6.6%, strongest in North American traffic.
Did I understand that data correctly, that the reported passenger numbers refer to sold tickets, not the actual operated numbers? So, is the reality different when considering cancelled flights?
Antti and Kaisa have written comments on Finnairâs April goings-on.
Finnair published its May traffic data on Wednesday, which were slightly stronger than our expectations overall. Despite a month marred by industrial action, sold volumes, capacity growth, and passenger load factor, in particular, slightly exceeded our expectations. Passenger numbers, on the other hand, fell slightly short of our forecasts. Overall, however, the report does not cause immediate pressure for changes to our Finnair Q2 forecasts at this stage.
Negotiated outcome in negotiations concerning Finnair pilots
A negotiated outcome regarding the collective agreement was reached today, Sunday, June 8, in negotiations between the Finnish Air Line Pilotsâ Association (Suomen LiikennelentĂ€jĂ€liitto SLL), representing Finnair pilots, and Service Sector Employers Palta.
The negotiated outcome is for three years, with the last year being terminable. The outcome follows the general labor market line. It still requires approval from the administrations of the negotiating parties.
Negotiations concerning Finnair pilots have been ongoing since last August.
âI am truly pleased that we have reached a negotiated outcome after long negotiations. Finnair pilots are a cornerstone of our hundred-year history, and we will continue to build forward together,â says Finnairâs SVP, Human Resources, Kaisa Aalto-Luoto.
Iâve somewhat lost faith and interest in Finnairâs agreements or lack thereof.
Yes, it was reported that pilots are no longer striking, but when other factors strike, you have to buy a holiday flight from another company than this âpartially-ownedâ oneâŠ
But now the national conciliator promised to push things all the way, wonât rest until some kind of agreement is reached.
