Quarterly Report • Oct 26, 2016
Quarterly Report
Open in ViewerOpens in native device viewer
* Unless otherwise stated, figures in brackets refer to the comparison period, i.e. the same period last year.
The demand outlook for passenger and cargo traffic in Finnair's main markets involves renewed uncertainty. Finnair's new estimate of capacity growth is approximately 7 per cent, while the previous estimate was a growth of 8 per cent compared to 2015. The revision is due to delays in the deliveries of A350 aircraft. The rate of revenue growth is estimated to be slower than the rate of capacity growth. Uncertainty regarding the demand and yield prospects of the airline industry has increased during recent months. Finnair estimates that its comparable operating result for 2016 will increase from the previous year (2015: 23.7 million euros).
The demand outlook for passenger and cargo traffic in Finnair's main markets continues to involve uncertainty. Finnair reiterates its previous assessment that its capacity will grow by approximately 7 per cent compared to 2015 and that revenue grows more slowly than capacity.
Market conditions are increasingly challenging; fuel price has turned upwards and market capacity growth continues to cause pressure on yields. Finnair estimates that its comparable operating result for 2016 will increase from the previous year (2015: 23.7 million euros).
Our comparable result for the third quarter exceeded last year´s record result by 1.5 million euros; hence, we achieved what was already the eighth consecutive quarterly result improvement. Our capacity as measured by available passenger kilometres increased by 8.4 per cent during the quarter, in line with our target for the next few years.
Considering the current market environment, we are satisfied about breaking the record result posted in the comparison period. Intense competition across the North Atlantic put pressure on our yields and affected our earnings performance somewhat. Furthermore, the flow of leisure travel – from China in particular – was impacted by concerns about the security conditions in Europe. This led to reduced materialisation of group reservations, which was reflected in our Asian load factors. We continue to believe that our full-year result will be in line with our previous guidance but point out that the rest of the year involves a lot of uncertainty and cost pressure.
During the third quarter, we succeeded in attracting more Asian tourists to the Nordic region rather than Southern or Central Europe; for example, Copenhagen recently surpassed Paris as the number one destination for our Chinese tourist groups. In addition, we are promoting Finland as a stopover or holiday destination, particularly during the winter months, when we are adding more capacity to Lapland. Furthermore, at the beginning of October, we also introduced an A350 service to London five times weekly, which provides both an attractive product for our Asian transfer passengers as well as an outstanding entry point from our home markets to the global network of our oneworld and joint business partners from London. In addition, it strengthens our cargo network considerably.
Our costs increased in the third quarter reflecting our preparation for traffic growth in line with our strategy, driven by our new A350 aircraft. However, due to changes in the delivery schedule of these aircraft, there is considerable uncertainty related to the training of our flight personnel. As a result, we are adjusting our traffic plan and leasing additional fleet with crew in order to be able to train our own staff as rapidly as possible. Our growth is also supported by the increase in the capacity of pilot training in Finland. Preparation for growth will cause extra costs over the next few years.
On the bright side, in Europe and in the domestic market, there were moderate increases in capacity utilisation and yields. Ancillary sales continued to be solid; we expect that they will be supported further in the near term by the renewal of our website and inflight sales system.
In connection with the release of our previous quarterly result, we announced a EUR 20 million efficiencyimprovement programme. Preparation of the programme is proceeding, and recent changes in the overall market further highlight the importance of efficiency. At the same time it helps us keep our strategy and medium-term growth plan on course.
Traffic continued to grow in Finnair's main markets in the third quarter of 2016. Measured in available seat kilometres, scheduled market capacity between Helsinki and Finnair's European destinations grew by approximately 1.3 per cent year-on-year, while direct market capacity between Finnair's Asian and European destinations grew by 3.1 per cent year-on-year. Finnair's July market share increased in European traffic (between Helsinki and Finnair's European destinations) to 59.7 per cent (58.1) and in Asian traffic (between AY operated European cities in Europe and in Asia) to 5.0 per cent (4.9).*
The strong growth in market capacity weighed on long-haul load factors and unit revenue somewhat. Long-haul market capacity development was uneven, with China-Europe market capacity growing strongly while growth between Japan and Europe was negative. Leisure travel from Asia to certain European destinations suffered from security concerns, while growth for the Nordic destinations was robust. Our North Atlantic business was affected by overcapacity, which resulted in lower yields. European demand-capacity growth was balanced, which was reflected in growing intra-European passenger numbers and yield.
The Atlantic Joint Business was affected by overcapacity between Europe and North America, and yields declined due to intensified competition. At the same time, the Siberian Joint Business strengthened its market share as market capacity between Europe and Japan continued to decrease in the third quarter.
The supply of packaged travel by tour operators active in Finland in late summer 2016 was mostly in balance with the demand. Unrest in Turkey continued to weigh on the demand for Turkish package tours, but at the same time there was strong demand for other destinations. Overall, the cargo market remained sluggish, though the downward trajectory seems to have levelled off somewhat.
The declining trend in the price of jet fuel that began in autumn 2014 ended in the first quarter. Nevertheless, the dollar price of jet fuel was still 13.0 per cent lower in the third quarter than in the comparison period. The US Dollar, the most significant expense currency after the euro, appreciated heavily from autumn 2014 until spring 2015. After that, however, the US Dollar has shown signs of stabilisation, and it depreciated by 0.4 per cent against the euro year-on-year. In regards to key income currencies, the Japanese yen has continued its appreciation since autumn 2015, strengthening by 18.9 per cent against the euro year-on-year, while the Chinese yuan depreciated by 5.8 per cent year-on-year. Finnair hedges its fuel purchases and key foreign currency items; hence, market fluctuations are not reflected one-for-one in its result.
* Finnair's estimate. The basis for calculation is destination cities, not airports.
At the end of September, Finnair took delivery of its seventh Airbus A350 and finalised an agreement to sell the aircraft to GE Capital Aviation Services Limited ("GECAS") and lease it back for its own operation. The arrangement had a positive one-time effect of approximately 40 million euro on Finnair's operating profit for the third quarter of 2016, including a gain on sale and currency gains on pre-delivery payments and hedges.
Finnair's revenue in the third quarter of 2016 grew by 3.1 per cent year-on-year to 640.9 million euros (621.7). Passenger revenue, ancillary and retail revenue and travel services grew, while cargo revenue was broadly unchanged and travel agency revenue decreased due to a business divestment. Unit revenue (RASK) decreased by 4.9 per cent year-on-year and amounted to 7.05 euro cents (7.42).
Revenue by product
| EUR million | 7–9/2016 | 7–9/2015 | Change % | 2015 |
|---|---|---|---|---|
| Passenger revenue | 515.9 | 504.4 | 2.3 | 1,766.0 |
| Ancillary and retail revenue | 33.8 | 27.7 | 22.2 | 103.2 |
| Cargo | 45.5 | 45.9 | -0.9 | 183.7 |
| Travel services | 42.0 | 38.3 | 9.8 | 177.8 |
| Travel agencies | 3.7 | 5.5 | -31.9 | 23.8 |
| Total | 640.9 | 621.7 | 3.1 | 2,254.5 |
| Ticket revenue | ASK | RPK | PLF | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Traffic area | EUR mill. |
Change % |
Share % |
Mill. km |
Change % |
Share % |
Mill. km |
Change % |
Share '% |
% | Change %-point |
|
| Asia | 224.9 | 1.2 | 43.6 | 4,332.1 | 12.6 | 47.7 | 3,770.5 | 8.4 | 49.3 | 87.0 | -3.3 | |
| North Atlantic | 38.4 | 15.5 | 7.4 | 798.5 | 22.0 | 8.8 | 648.4 | 12.2 | 8.5 | 81.2 | -7.1 | |
| Europe | 213.8 | 3.1 | 41.4 | 3,656.8 | 2.5 | 40.2 | 3,029.6 | 3.5 | 39.6 | 82.8 | 0.8 | |
| Domestic | 31.1 | -3.7 | 6.0 | 299.2 | -4.8 | 3.3 | 204.8 | -1.5 | 2.7 | 68.4 | 2.3 | |
| Unallocated | 7.8 | -16.3 | 1.5 | |||||||||
| Total | 515.9 | 2.3 | 100 | 9,086.7 | 8.4 | 100 | 7,653.3 | 6.5 | 100 | 84.2 | -1.5 |
Passenger traffic capacity (measured in Available Seat Kilometres (ASK)) grew by 8.4 per cent overall, while traffic (measured in revenue passenger kilometres) grew by 6.5 per cent. The ASK growth mostly stemmed from long-haul traffic. Compared with the third quarter of 2015, Finnair operated two more widebody aircraft and the same number of narrowbody aircraft in the review period.
In Asian traffic, capacity in the third quarter grew by 12.6 per cent year-on-year. The increase was attributable to several factors, including the additional capacity due to the new A350 being larger than the aircraft they are replacing, increase in average stage length due to higher frequencies on the Singapore and Shanghai routes, and the launch of the Fukuoka and Guangzhou routes in May. The passenger load factor in Asian traffic decreased by 3.3 percentage points to 87.0 per cent. The capacity in North Atlantic traffic increased by 22.0 per cent as Finnair added a fourth and fifth weekly frequency to Chicago and operated to Miami instead of Toronto, which contributed to ASK growth through the longer stage length. The passenger load factor in Transatlantic traffic decreased by 7.1 percentage points to 81.2 per cent.
Ancillary and retail revenue increased by 22.2 per cent year-on-year and amounted to 33.8 million euros. Growth was particularly strong in advance seat reservations, as well as additional baggage fees. Cargo traffic grew considerably: revenue tonne kilometres increased by 13.8 per cent while available cargo tonne kilometres increased by 5.7 per cent. However, as a result of the weak market conditions, average cargo yields declined and cargo traffic revenue decreased by 0.9 per cent year-on-year, amounting to 45.5 million euros.
The revenue of Finnair's travel services (Aurinkomatkat Suntours) in July–September increased by 9.8 per cent from the previous year and amounted to 42.0 million euros (38.3).The number of travellers increased by 11.5% from the comparison period, and the load factor in Suntour's fixed seat allotment was 97.3%. The year-on-year decrease in travel agencies' revenue is attributable to the divestment of SMT's Baltic subsidiary Estravel in December 2015. Finnair signed an agreement in May to also sell SMT, and the transaction is expected to be completed in the fourth quarter.
Finnair's operating expenses increased by 2.6 per cent in the third quarter and amounted to 591.4 million euros (576.2). Unit cost (CASK) decreased by 4.8 per cent and totalled 6.33 euro cents (6.65).
Operating expenses excluding fuel increased by 9.4 per cent from the comparison period, and amounted to 462.7 million euros (422.9). The costs in the review period were augmented by various growth measures
relating, for example, to temporary wet lease arrangements, the roll-out of the A350 fleet, and crew training, estimated at some 8 million euros in total distributed across various cost categories.
Fuel costs, including hedging and emissions trading costs, decreased despite the capacity growth by 16.1 per cent to 128.7 million euros (153.4). Staff costs increased by 11.4 per cent to 87.4 million euros (78.5) while the number of personnel grew by 4.9 per cent. In the comparison period, there were positive one-time items in the staff costs. The increase in the number of employees primarily consisted of flight crew.
In April, Finnair concluded a transaction with its joint venture Norra, to take over the maintenance of ATR aircraft operated by Norra. Previously, their maintenance cost was part of the purchase traffic charge paid by Finnair to Norra, included in other rents. As a result, the change reduced other rents and increased both overhaul and staff costs. At the same time, volume growth and increased business class travel led to higher lounge and catering costs.
Other expenses increased by 9.1 million euros to 64.0 million euros. The increase in other expenses was partly attributable to the higher traffic volume, but also to the fact that the currency hedging result was more positive in the comparison period.
Finnair's comparable EBITDAR increased by 3.2 million euros to 118.3 million euros (115.1). The comparable operating result, which refers to the operating result excluding items affecting comparability, capital gains and changes in the fair value of derivatives and in the value of foreign currency-denominated fleet maintenance reserves, increased by 1.4 million euros and amounted to 65.7 million euros (64.2).
The change in the fair value of derivatives and in the value of foreign currency denominated fleet maintenance reserves amounted to 7.4 million euros (-10.9). The items affecting comparability amounted to 42.4 million euros (-2.7), mostly relating to the sale and leaseback of an A350 aircraft. The operating result was 115.5 million euros (50.7), the result before taxes was 109.9 million euros (48.9) and the result after taxes was 87.6 million euros (39.0).
Finnair's revenue in January–September 2016 grew by 3.6 per cent year-on-year to 1,746.9 million euros (1,686.8). Revenue was boosted by higher passenger revenue, ancillary and retail revenue and travel services revenue, and it was negatively affected by a decrease in cargo revenue as well as the elimination of revenue from businesses sold after the comparison period. Unit revenue (RASK) decreased by 3.7 per cent year-on-year and amounted to 6.79 euro cents (7.05).
| Revenue by product | ||||
|---|---|---|---|---|
| EUR million | 1–9/2016 | 1–9/2015 | Change % | 2015 |
| Passenger revenue | 1,378.1 | 1,333.1 | 3.4 | 1,766.0 |
| Ancillary and retail revenue | 93.7 | 75.1 | 24.8 | 103.2 |
| Cargo | 127.7 | 135.7 | -5.9 | 183.7 |
| Travel services | 135.2 | 125.1 | 8.1 | 177.8 |
| Travel agencies | 12.1 | 17.8 | -32.1 | 23.8 |
| Total | 1,746.9 | 1,686.8 | 3.6 | 2,254.5 |
| Ticket revenue | ASK | RPK | PLF | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Traffic area | EUR mill. |
Change, % |
Share % |
Mill. km |
Change, % |
Share % |
Mill. km |
Change, % |
Share % |
% | Change, %-point |
| Asia | 563.7 | 0.5 | 40.9 | 12,423.7 | 8.4 | 48.3 | 10,208.5 | 6.4 | 49.4 | 82.2 | -1.5 |
| North America | 92.9 | 15.7 | 6.7 | 2,102.9 | 27.8 | 8.2 | 1,687.2 | 21.1 | 8.2 | 80.2 | -4.4 |
| Europe | 578.9 | 3.9 | 42.0 | 10,069.0 | 3.0 | 39.1 | 7,972.1 | 3.4 | 38.6 | 79.2 | 0.3 |
| Finland | 119.4 | 7.4 | 8.7 | 1,124.3 | 8.6 | 4.4 | 777.2 | 9.9 | 3.8 | 69.1 | 0.8 |
| Unallocated | 23.2 | -1.5 | 1.7 | ||||||||
| Total | 1,378.1 | 3.4 | 100 | 25,719.9 | 7.5 | 100 | 20,645.0 | 6.4 | 100 | 80.3 | -0.8 |
Passenger traffic capacity measured in Available Seat Kilometres (ASK) grew by 7.5 per cent, while traffic measured in revenue passenger kilometres grew by 6.4 per cent. The growth in long-haul traffic was attributable to the additional capacity introduced by the A350 aircraft, operation to Fukuoka, Guangzhou and Miami in the summer, as well as increased frequencies on the Chicago route and longer stage lengths for new Asian routes. Capacity growth in European and domestic traffic particularly reflects the inclusion of flights previously operated at Norra's risk as Finnair's traffic starting from the second quarter of 2015.
Finnair's operating costs increased by 1.3 per cent in the first nine months of 2016 and amounted to 1,749.5 million euros (1,727.2). Unit cost (CASK) decreased by 5.3 per cent and totalled 6.58 euro cents (6.96).
Fuel costs decreased by 18.2 per cent and amounted to 376.6 million euros. Hence, operating costs excluding fuel increased by 8.4 per cent and amounted to 1,372.9 million euros. The result for the review period was impacted by exceptionally high cancellations of domestic flights in the beginning of the year, temporary wet lease arrangements, the roll-out of the A350 fleet and related crew training. In January–September, these cost items totalled up to 20 million euros.
Finnair's comparable EBITDAR grew by 39.3 million euros and amounted to 211.0 million euros (171.7). The comparable operating result, which refers to the operating result excluding items affecting comparability, capital gains and changes in the fair value of derivatives and in the value of foreign currency-denominated fleet maintenance reserves, increased by 30.6 million euros and amounted to 53.5 million euros (22.9).
The change in the fair value of derivatives and in the value of foreign currency denominated fleet maintenance reserves amounted to 11.7 million euros (3.2). The items affecting comparability amounted to 32.7 million euros (10.6), positive items being primarily related to the sale and leaseback of an A350 and negative items to the phasing out of A340 aircraft. The operating result was 98.0 million euros (36.7), the result before taxes was 89.9 million euros (29.4) and the result after taxes was 71.5 million euros (23.2).
The Group's balance sheet totalled 2,465.2 million euros at the end of the period under review (31 Dec 2015: 2,050.3). The balance sheet grew in January–September mainly due to debt-financed aircraft purchases, the sale and leaseback of one A350 aircraft, and positive operating cash flow. Shareholders' equity was 828.5 million euros (31 Dec 2015: 727.5), or 6.51 euros per share (31 Dec 2015: 5.69). Shareholders' equity increased primarily due to the company's profitable comprehensive income.
Shareholders' equity includes a fair value reserve that is affected by changes in the fair values of oil and currency derivatives used for hedging as well as actuarial gains and losses related to pilots' defined benefit plans according to IAS 19. The value of the item at the end of September 2016 was -33.1 million euros (31 Dec 2015: -67.9) after deferred taxes, and it was affected particularly by changes in the fair value of the aforementioned hedging instruments. In addition, pension liability increased primarily due to a change in the discount rate reflecting the decline in the general interest rate level.
Finnair has a strong financial position, which supports business development and future investments. In January–September 2016, net cash flow from operating activities amounted to 189.2 million euros (164.0). The year-on-year increase in cash flow was primarily attributable to the improvement of comparable operating result. Net cash flow from investments amounted to -234.8 million euros (86.4) and was particularly attributable to the acquisition of new A350 aircraft and an decrease in money market investments with maturities exceeding three months and therefore classified as investments.
The equity ratio on 30 September 2016 stood at 33.6 per cent (31 Dec 2015: 35.5) and gearing was negative at -26.1 per cent (31 Dec 2015: -49.8). The adjusted gearing was 67.7 per cent (31 Dec 2015: 45.8). At the end of September, interest-bearing debt amounted to 655.0 million euros (31 Dec 2015: 346.5) and interest-bearing net debt was negative at -216.5 million euros (31 Dec 2015: -362.0). During the first nine months of the year, Finnair secured three JOLCO financing arrangements for its new A350 aircraft and finalised a sale and leaseback agreement on an A350 aircraft, with the total acquired financing amounting to approximately 507 million euros.
The company's liquidity was strong in the review period. The Group's cash funds amounted to 874.3 million euros (31 Dec 2015: 708.2) at the end of September. In addition to the cash funds on the balance sheet, the Group has the option of re-borrowing employment pension fund reserves worth approximately 430 million euros from its employment pension insurance company. Using these reserves requires a bank guarantee. Finnair has an entirely unused 175-million-euro syndicated credit facility, which is intended as reserve funding and was signed in June as the previous corresponding agreement matured. The new arrangement has a maturity of three years with two optional one-year extensions. Finnair prepaid all of its bank debt, approximately 67 million euros during the period.
Finnair has a 200-million-euro short-term commercial paper program, which was unused at the end of the review period. Net cash flow from financing in January–September amounted to 270.2 million euros (-78.2). Financial expenses were -9.4 million euros (-8.2) and financial income stood at 1.2 million euros (0.8).
In January–September, capital expenditure excluding advance payments totalled 424.0 million euros (38.2) and was primarily related to fleet investments. Net cash flow from investments (capital expenditure) totalled -443.1 million euros, including advance payments.
Cash flow from investments for the full year 2016, including advance payments and the currency hedging of advance payments, is estimated at approximately 560 million euros, mainly consisting of investments in the fleet. This figure includes, in addition to investment commitments, also an estimate of investments which have been decided on, but not yet concluded with a counterparty. Net investments will amount to approximately 390 million euros, taking into account the sale and leaseback agreement for the A350 aircraft finalised in the third quarter.
Cash flow from investments for 2017 is estimated at approximately 510 million euros, or 260 million net, if the sale and leaseback agreement signed for the A350 aircraft scheduled for delivery in 2017 will be finalised as planned. The investment financing need in 2016–2017 may potentially be reduced by sales of aircraft to be carried out at a later time.
Finnair will add seating capacity to its current Airbus narrow-body aircraft in 2017–2018 by modifying storage and technical space at the front and rear of the aircraft. The investment includes 23 narrow-body Airbus aircraft in Finnair's fleet.
In addition to fleet investments, Finnair is developing a modern cargo terminal to be commissioned in spring 2017. Finnair will also introduce wireless Internet connectivity to the majority of its current wide-body and narrow-body fleet in 2017–2018.
The current favourable state of the credit market and Finnair's good debt capacity enable the financing of future fixed-asset investments on competitive terms. The company has 33 unencumbered aircraft, the balance sheet value of which corresponds to approximately 57 per cent of the value of the entire fleet of 1.0 billion euros. The balance sheet value includes three finance lease aircraft.
Finnair's fleet is managed by Finnair Aircraft Finance Oy, a wholly-owned subsidiary of Finnair Plc. At the end of September 2016, Finnair itself operated 49 aircraft, of which 19 are wide-body and 30 narrow-body aircraft. Of the aircraft, 26 were owned by Finnair, 20 were leased and 3 on finance lease.
Finnair took delivery of one new A350-900 XWB wide-body aircraft in the second quarter. The aircraft was financed with a sale and leaseback arrangement announced on 29 September 2016.
The average age of the fleet operated by Finnair was 10.0 years at the end of the third quarter of 2016.
| Fleet operated by | Seats | # | Change Own** | Leased | Average | Ordered | ||
|---|---|---|---|---|---|---|---|---|
| Finnair on 30 September 2016* | from | (Operating | (Finance | age | ||||
| 31.12.2015 | lease) | lease) | 30.9.2016 | |||||
| Narrow-body fleet | ||||||||
| Airbus A319 | 138 | 9 | 7 | 2 | 15.2 | |||
| Airbus A320 | 165 | 10 | 1 | 7 | 3 | 14.1 | ||
| Airbus A321 | 209/196 | 11 | 4 | 7 | 9.8 | |||
| Wide-body fleet | ||||||||
| Airbus A330 | 289/263 | 8 | 0 | 5 | 3 | 6.9 | ||
| Airbus A340 | 263/257 | 4 | -1 | 4*** | 8.8 | |||
| Airbus A350 | 297 | 7 | 3 | 4 | 3 | 0.5 | 12 | |
| Total | 49 | 3 | 26 | 20 | 3 | 10.0 | 12 |
* Finnair's Air Operator Certificate (AOC).
** Includes JOLCO-financed A350 aircraft.
*** Only two of the A340s were in operation at end-September.
Finnair has ordered a total of 19 Airbus A350 XWB aircraft from Airbus, three of which were delivered in 2015 and four in 2016. According to the current delivery schedule, Finnair will receive four new A350 aircraft also in 2017 and the remaining eight between 2018–2023. Finnair's investment commitments for property, plant and equipment, totalling 1,542 million euros, include the upcoming investments in the long-haul fleet.
Finnair plans to phase out its A340 aircraft by the end of 2017, following the successful delivery and entry into service of the A350 XWB aircraft. Finnair has agreed to sell its remaining four Airbus A340-300 aircraft back to Airbus in 2016 and 2017. The agreement between Finnair and Airbus ensures a smooth transition from A340s to A350s, mitigating potential operational risks related to fleet renewal and the depreciation risk associated with the A340 aircraft. Finnair has the possibility to adjust the size of its fleet flexibly according to demand and outlook due to its lease agreements of different durations.
Nordic Regional Airlines (Norra) operates a fleet of 24 aircraft for Finnair on a contract flying basis. Of the aircraft operated by Norra, 11 are owned by Finnair and 13 are leased. On 29 June 2016, Finnair signed an agreement on the sale of one ATR 72 aircraft. The disposal of the aircraft from the fleet has been postponed to the first half of 2017.
| Fleet operated by Norra | Seats | # | Change | Aircraft | Leased** | Average | Ordered |
|---|---|---|---|---|---|---|---|
| on 30 September 2016* | from | owned by | (Operating | age | |||
| 31.12.2015 | Finnair | lease) | 30.9.2016 | ||||
| ATR 72 | 68–72 | 12 | 6 | 6 | 7.2 | ||
| Embraer 170 | 76 | 0 | -2 | 0 | |||
| Embraer 190 | 100 | 12 | 5 | 7 | 8.3 | ||
| Total | 24 | 0 | 11 | 13 | 7.7 | 0 |
* Nordic Regional Airlines Oy's Air Operator Certificate (AOC).
** Finnair's subsidiary Finnair Aircraft Finance has leased these aircraft and subleased them to Nordic Regional Airlines.
Finnair offers connections between Asia and Europe with over 200 route pairs and also operates more than 800 flights weekly from Helsinki to other Finnish and European destinations. The maximum weekly number of flights to Asia was 78 in the winter season 2015/2016, 80 in the summer season 2016 and 78 in the winter season 2016/2017.
Finnair is part of the oneworld alliance and it also engages in closer cooperation with certain oneworld partners through participation in joint businesses, namely the Siberian Joint Business and Atlantic Joint Business. The joint businesses are agreements on revenue sharing and price coordination for flights to the route areas in question. In autumn 2016, Iberia joined Finnair, Japan Airlines and British Airways as a member of the SBJ.
Finnair's new scheduled flight destinations for the summer season 2016 from Helsinki were Edinburgh, Billund, Pula, Zakynthos, Skiathos, Santorini, Preveza, Rimini, Verona and Varna, as well as weekly flights from Oulu to Hania and Alanya. In long-haul traffic, Finnair launched Miami as a year-round destination and increased connections to Chicago for the summer. In Asia, Finnair introduced three weekly flights to Fukuoka and four to Guangzhou for the summer.
For the coming winter season, Finnair will increase flights to Lapland by approximately 10%. For summer 2017, Finnair will add frequencies to Tokyo and Hong Kong and introduce new routes from Helsinki to San Francisco, Alicante, Ibiza, Korfu, Menorca and Reykjavik.
In April, Finnair began to offer stopovers in Finland for its passengers travelling between Asia and Europe. The stopover flights can be booked on the new stopover.finnair.com website, which also includes information on various stopover activities and destination information on Finland. StopOver Finland is a project led by Visit Finland, and the travel packages are implemented by an external travel agency partner. The duration of the stopover travel packages ranges from five hours to five days.
In July, Finnair and Alitrip, a Chinese travel agency, signed a long-term strategic partnership aiming to bring approximately 3,000 Chinese tourists to the Finnish Lapland during the winter months. Finnair is the first strategic European airline partner for Alitrip with a project of this magnitude. Alitrip is a fast-growing travel platform in China owned by the Alibaba Group, listed on the New York Stock Exchange.
In August, the Finnair mobile app was awarded a Red Dot Award in the Communications Design category. The Finnair app, which is available for iOS and Android devices was also recognized by the European Design organization with a Silver Award in the Mobile Apps category earlier this year. Celebrating the best in design, the Red Dot Awards are selected by a jury of well-known experts in the design industry.
In July, the Skytrax World Airline Awards chose Finnair as the best airline in Northern Europe for the seventh consecutive time. The award is based on an independent Skytrax survey of some 19 million travellers from more than 160 countries. The survey covers more than 40 criteria including check-in, seat comfort, cabin cleanliness and service.
In April, Finnair was named the best European airline operating in China at the TTG China Travel Awards. The award was based on votes cast by the readers of TTG's publications.
Finnair was awarded a Gold Medal in the ICARUS sustainability competition organised by the Global Business Travel Association (GBTA) in recognition of its position as a leader in sustainability in the travel industry, whose commitment and actions have proved it is capable of providing its customer companies and passengers with travel services that are first-class from the perspective of sustainable development.
The German ESG rating company oekom research AG updated its analysis of Finnair's responsibility in February. Finnair's current ESG rating is B-, which is the highest rating in its category comprising 77 companies in the transport and logistics sector. Finnair was also awarded Prime status indicating the suitability of Finnair's securities for responsible investors.
The OAG Punctuality League publication released in January ranked Finnair's arrival punctuality in 2015 (89.5%) as the sixth-highest in the world. In January, FlightStats recognised the oneworld alliance as the most punctual airline alliance in 2015.
In a stock exchange release published on 16 February 2016, Finnair announced the acceleration its growth and renewal of its organisation as of 1 March 2016 in line with its growth strategy. Piia Karhu, who was appointed Senior Vice President in charge of Customer Experience, and Katri Harra-Salonen, appointed SVP, Digitalisation, were introduced as new Executive Board members. Jaakko Schildt, who was appointed SVP, Operations, took office on 1 August 2016. Until then, the unit was led by Ville Iho, appointed SVP, Strategy and Resource Management, together with Mikko Tainio, VP, Ground Services.
Finnair employed an average of 5,055 (4,896) people in January–September 2016, which is 3.2 per cent higher than in the comparison period. The number of employees in an employment relationship on 30 September 2016 was 5,180 (30 Sep 2015: 5,000; 31 Dec 2015: 4,817). During the review period (1–9/2016), the number of personnel increased by 363, primarily due to an increase in the number of cabin crew and pilots. In addition, 50 maintenance employees were transferred from Norra to Finnair in conjunction with a transaction in May.
Representing Finnair, Service Sector Employers PALTA reached an agreement with office personnel, customer service personnel and technical personnel, represented by FINTO, PRO and IAU, on terms of employment in accordance with the framework of the national competitiveness pact, within the timeframe set by the central labour market organisations. Negotiations on collective labour agreements will be held with the flight crew during the second half of the year.
Finnair acquired a total of 800,000 of its own shares on the Helsinki Stock Exchange in the first quarter of 2016 and transferred 277,596 of its own shares as incentive bonuses to members of the Fly Share employee share savings plan. In June, Finnair transferred a total of 28,464 of its own shares to the 31 participants of Finnair's share-based incentive scheme 2013–2015 as a reward payment.
On 30 September 2016, Finnair held a total of 819,145 of its own shares (326,985), representing 0.64 per cent of the total share capital.
At the end of September 2016, Finnair's market value stood at 562.5 million euros (393.4), and the closing price of the share was 4.39 euros (3.07). During the January–September period, the highest price for the Finnair Plc share on the NASDAQ Helsinki Stock Exchange was 5.92 euros (3.30), the lowest price 4.11 euros (2.49) and the average price 4.94 euros (3.01). Some 20.8 million (14.0) of the company's shares, with a total value of 102.9 million euros (42.1), were traded.
The number of Finnair shares recorded in the Trade Register was 128,136,115 at the end of the period. The Finnish state owned 55.8 per cent (55.8) of Finnair's shares, while 8.9 per cent (7.7) were held by foreign investors or in the name of a nominee.
Economic, social and environmental sustainability is integral to Finnair's overall business strategy and operations. Finnair wants to be a responsible global citizen and respond to its stakeholders' needs, also from the perspective of corporate responsibility.
Finnair is cooperating with industry operators and the authorities in areas such as reducing the climate impacts of aviation and promoting the use of biofuels. Finnair's corporate responsibility is reflected in its strategy and vision as well as its values of commitment to care, simplicity and courage. Responsibility is integral to all Finnair operations. The purpose of the responsibility strategy is to reduce environmental impacts and generate financial and social utility for society.
The assembly of the International Civil Aviation Organization (ICAO) concluded a historic agreement in the autumn on market-based measure to help stabilize airline emissions at the level of 2020. Sixty-five ICAO member states, including Finland, have agreed to join the so-called Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) from the outset. This means an obligation for airlines to compensate their emissions exceeding the target by purchasing emission reduction units primarily from other sectors. These units will be sold by projects reducing greenhouse gas emissions. The CORSIA agreement is one element in the aviation sector's actions on climate change. Other environmental improvement measures include the use of modern technology, the adoption of sustainable alternative fuels, efficient operational practices and improvements in infrastructure. The countries participating in the scheme in the first stage as of 2021 cover approximately 85% of the world's aviation activity. From 2027 onwards, it will be mandatory on a global scale.
In June 2016, Finnair signed a cooperation agreement with UNWomen to support women's rights. Finnair also signed the United for Wildlife Transport Taskforce Buckingham Palace Declaration, which denounces the illegal transportation and trade of wildlife and wildlife products. The pledge also aims to increase partnerships with government authorities and conservation organisations in the fight against traffickers and smugglers of endangered animals. For several years, Finnair has refused to carry any animals or wildlife products that are contrary to the Convention on International Trade in Endangered Species of Wildlife Fauna and Flora (CITES). In 2015, Finnair took the extra step of prohibiting the transport of hunting trophies or memorabilia originating from endangered species in its cargo network.
The key performance indicators for corporate responsibility are presented under "Key Figures" in the tables section.
Aviation is an industry that is sensitive to global economic cycles and reacts quickly to external disruptions, seasonal variation and economic trends. In the implementation of its strategy, Finnair and its operations are faced with various risks and opportunities. Finnair has implemented a comprehensive risk management process to ensure that risks are identified and mitigated as much as possible, although many risks are not within the company's full control. To exploit value creation opportunities, Finnair is also prepared to take and manage risks within the limits of its risk-bearing capacity.
The risks and uncertainties described below are considered to potentially have a significant impact on Finnair's business, financial result and future outlook within the next 12 months. This list is not intended to be exhaustive.
Exceptional variation in fuel price and the potential of the recent decrease in fuel price to be passed on to flight ticket prices or lead to an increase in capacity in Finnair's main markets as well as sudden, adverse changes in currency exchange rates constitute a risk for Finnair's revenue development. The reduction in the demand for passenger or cargo flights due to slowing or non-existent economic growth in Finnair's main markets also constitutes a risk for Finnair's revenue development.
Potential capacity increases and product improvements among Finnair's existing or new competitors may have an impact on the demand for and yield of Finnair's services. In addition, joint operations involving closer cooperation than airline alliances, and joint businesses, are expected to develop further.
The achievement of the strategic advantages and cost reductions sought through Finnair's partnership and outsourcing projects involves risks. For example, quality or availability issues and/or unexpected additional costs of partnerships and suppliers can have a negative effect on Finnair's product, reputation and profitability.
The delivery schedule and use of the next-generation Airbus A350 XWB aircraft involves risks associated with new technology and roll-out processes. In addition, the implementation of Finnair's strategy includes significant operating and internal changes, which involve risks. Finnair's capacity expansion programme and its resourcing could generate further cost pressure and operational challenges in the short term.
The aviation industry is affected by a number of regulatory projects at the EU and international levels. Estimating the impacts of the regulatory changes on airlines' operational activities and/or costs in advance is difficult. Examples of such regulatory projects include international regulation related to emission trading, noise regulation and other environmental regulation, EU regulations on privacy protection and the decision made by the Court of Justice of the European Union in October 2012 regarding flight passengers' rights. In addition, regulations on the reporting of non-financial information (responsibility) and other stakeholder requirements have increased substantially.
Geopolitical uncertainty, the elevated threat of terrorism and other potential external disruptions may, if they materialise, significantly affect the demand for air travel and Finnair's operations.
The upcoming exit of the United Kingdom from the European Union involves general economic uncertainty that may also be reflected in the demand for air travel.
The construction work associated with the extension of Helsinki Airport, which will continue until 2020, may cause traffic disruptions. Finnair is engaged in close cooperation with Finavia to minimise the negative impacts of the expansion project. The expansion will facilitate the increase of the airport's annual passenger volume to 20 million and the implementation of Finnair's growth strategy.
Finnair's risk management and risks related to the company's operations are described in more detail on the company's website at www.finnairgroup.com.
Due to the seasonal variation of the airline business, the Group's revenue and profit are generally very much at their lowest in the first quarter and at their highest in the third quarter of the year. The growing proportional share of Asian traffic increases seasonal fluctuation due to destination-specific seasons in Asian leisure and business travel.
In addition to operational activities, fuel price development has a key impact on Finnair's result, as fuel costs are the company's most significant expense item. Finnair's foreign exchange risk arises primarily from fuel and aircraft purchases, aircraft leasing payments and sales revenue denominated in foreign currencies. Significant dollar-denominated expense items are aircraft leasing payments and fuel costs as well as traffic charges. The largest investments, namely the acquisition of aircraft and their spare parts, are also mainly denominated in US dollars. The most significant income currencies after the euro are the Japanese yen, the Chinese yuan and the Swedish crown.
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, according to the risk management policy verified by the Board of Directors. Fuel purchases are hedged for 24 months forward on a rolling basis, and the degree of hedging decreases towards the end of the hedging period. The higher and lower limits of the degree of hedging are 90 and 60 per cent for the following six months.
| Sensitivities in business operations, impact on comparable operating profit | |
|---|---|
| (rolling 12 months from date of financial statements) | 1 percentage (point)change |
| Passenger load factor (PLF) | EUR 22 million |
| Average yield of passenger traffic | EUR 19 million |
| Unit cost (CASK ex. fuel) | EUR 18 million |
| Fuel sensitivities | 10% change | 10% change, taking |
Hedging ratio | |||||
|---|---|---|---|---|---|---|---|---|
| (rolling 12 months from date of financial statements) | without hedging | hedging into account |
H2/2016 | H1/2017 | ||||
| Fuel | EUR 41 million | EUR 21 million | 72% | 66% | ||||
| Currency distribution % |
7–9 2016 |
7–9 2015 |
1–9 2016 |
1–9 2015 |
2015 | Currency sensitivities USD and JPY (rolling 12 months from date of financial statements) |
Hedging ratio for operational cash flows (rolling 12 m from date of financial statements) |
|
| Sales currencies | 10% change without hedging |
10% change, taking hedging into account |
||||||
| EUR | 48 | 50 | 55 | 56 | 48 | - | - | |
| USD* | 6 | 3 | 4 | 2 | 6 | see below | see below | see below |
| JPY | 12 | 11 | 9 | 9 | 12 | EUR 11 million | EUR 8 million | 70% |
| CNY | 10 | 11 | 7 | 8 | 10 | - | - | |
| KRW | 4 | 3 | 3 | 3 | 4 | - | - | |
| SEK | 4 | 4 | 5 | 5 | 4 | - | - | |
| Other | 16 | 18 | 17 | 17 | 16 | - | - | |
| Purchase currencies |
||||||||
| EUR | 55 | 52 | 54 | 51 | 55 | - | - | |
| USD* | 38 | 40 | 39 | 41 | 38 | EUR 53 million | EUR 17 million | 68% |
| Other | 7 | 8 | 7 | 8 | 7 |
* Hedging ratio for USD basket. The sensitivity analysis assumes that the Chinese yuan and the Hong Kong dollar continue to correlate strongly with the US dollar.
The publication dates of Finnair's financial reports for 2016 are as follows:
Financial Statements Bulletin 1 January – 31 December 2016: 15 February 2017
FINNAIR PLC Board of Directors
Finnair will hold a press conference related to the announcement of its result on 26 October 2016 at 11:00 a.m. and an analyst briefing at 12:30 p.m. at its office at Tietotie 9. An English-language telephone conference and webcast will begin at 2:30 p.m. Finnish time. The conference may be attended by dialling your local access number + 44 20 3059 8125 and quoting "Finnair" to the operator. To join the live webcast, please register at: http://www.investis-live.com/finnair/57fb74bf0397821c00021187/7w2r2
Chief Financial Officer Pekka Vähähyyppä, tel. +358 9 818 8550, [email protected] Financial Communications Manager Ilkka Korhonen, tel. +358 9 818 4705, [email protected] IRO Kati Kaksonen, tel. +358 9 818 2780, [email protected]
| Q1-Q3 | Q1-Q3 | ||||||
|---|---|---|---|---|---|---|---|
| Key figures | Q3 2016 | Q3 2015 | Change % | 2016 | 2015 | Change % | 2015 |
| Revenue and result | |||||||
| Revenue, EUR million * | 640.9 | 621.7 | 3.1 | 1,746.9 | 1,686.8 | 3.6 | 2,254.5 |
| Comparable operating result, EUR million | 65.7 | 64.2 | 2.3 | 53.5 | 22.9 | 133.2 | 23.7 |
| Comparable operating result, % of revenue * | 10.3 | 10.3 | -0.1 %-p | 3.1 | 1.4 | 1.7 %-p | 1.1 |
| Operating result, EUR million | 115.5 | 50.7 | 127.8 | 98.0 | 36.7 | 166.7 | 121.7 |
| Comparable EBITDAR, EUR million | 118.3 | 115.1 | 2.8 | 211.0 | 171.7 | 22.9 | 231.2 |
| Result before taxes, EUR million | 109.9 | 48.9 | 124.8 | 89.9 | 29.4 | > 200 % | 113.3 |
| Net result, EUR million | 87.6 | 39.0 | 124.3 | 71.5 | 23.2 | > 200 % | 89.7 |
| Balance sheet and cash flow | |||||||
| Equity ratio, % | 33.6 | 28.5 | 5.1 %-p | 35.5 | |||
| Gearing, % | -26.1 | -32.9 | 6.7 %-p | -49.8 | |||
| Adjusted gearing, % | 67.7 | 82.9 | -15.2 %-p | 45.8 | |||
| Gross capital expenditure, EUR million | 104.9 | 18.4 | > 200 % | 424.0 | 38.2 | > 200 % | 329.7 |
| Return on capital employed (ROCE), LTM, % | 15.4 | -0.4 | 15.8 %-p | 12.2 | |||
| Return on equity (ROE), LTM, % | 19.9 | -4.0 | 23.9 %-p | 14.4 | |||
| Net cash flow from operating activities, EUR million | 59.1 | 62.6 | -5.5 | 189.2 | 164.0 | 15.4 | 171.0 |
| Share | |||||||
| Share price at the end of quarter, EUR | 4.39 | 3.07 | 43.0 | 5.42 | |||
| Earnings per share (EPS), EUR | 0.66 | 0.29 | 128.7 | 0.47 | 0.13 | > 200 % | 0.57 |
| Traffic data and responsibility indicators | |||||||
| Passengers, 1,000 | 2,987 | 2,856 | 4.6 | 8,267 | 7,762 | 6.5 | 10,294 |
| Available seat kilometres (ASK), million | 9,087 | 8,383 | 8.4 | 25,720 | 23,920 | 7.5 | 31,836 |
| Revenue passenger kilometres (RPK), million | 7,653 | 7,189 | 6.5 | 20,645 | 19,399 | 6.4 | 25,592 |
| Passenger load factor, % | 84.2 | 85.8 | -1.5 %-p | 80.3 | 81.1 | -0.8 %-p | 80.4 |
| Unit revenue per available seat kilometre, (RASK), | |||||||
| cents/ASK * | 7.05 | 7.42 | -4.9 | 6.79 | 7.05 | -3.7 | 7.08 |
| RASK at constant currency, cents/ASK | 7.11 | 7.42 | -4.1 | 6.85 | 7.05 | -2.9 | 7.08 |
| Unit revenue per revenue passenger kilometre (yield), cents/RPK * |
|||||||
| Unit cost per available seat kilometre (CASK), cents/ASK * | 6.74 6.33 |
7.02 6.65 |
-3.9 | 6.68 6.58 |
6.87 6.96 |
-2.9 | 6.90 |
| -4.8 | -5.3 | 7.01 | |||||
| CASK excluding fuel, cents/ASK * | 4.91 | 4.82 | 2.0 | 5.12 | 5.03 | 1.8 | 5.14 |
| CASK excluding fuel at constant currency, cents/ASK | 4.88 | 4.82 | 1.2 | 5.08 | 5.03 | 1.1 | 5.14 |
| Ancillary and retail revenue per passenger (PAX) | 11.31 | 9.68 | 16.9 | 11.34 | 9.68 | 17.1 | 10.02 |
| Available tonne kilometres (ATK), million | 386 | 365 | 5.7 | 1,112 | 1,042 | 6.7 | 1,380 |
| Revenue tonne kilometres (RTK), million | 236 | 207 | 13.8 | 663 | 577 | 14.8 | 787 |
| Cargo and mail, tonnes | 38,839 | 33,487 | 16.0 | 109,816 | 95,391 | 15.1 | 130,697 |
| Cargo traffic unit revenue per revenue tonne kilometre, cents/RTK * |
19.27 | 22.13 | -12.9 | 19.26 | 23.51 | -18.1 | 23.34 |
| Overall load factor, % | 68.5 | 69.9 | -1.4 %-p | 66.1 | 66.4 | -0.2 %-p | 66.4 |
| Flights, number | 27,878 | 28,712 | -2.9 | 83,050 | 80,672 | 2.9 | 108,471 |
| Arrival punctuality, % | 87.3 | 91.3 | -4.0 %-p | 86.7 | 89.2 | -2.5 %-p | 89.5 |
| Fuel consumption, tonnes/ASK | 0.0256 | 0.0270 | -5.36 | 0.0259 | 0.0260 | -0.71 | 0.0262 |
| CO2 emissions, tonnes/ASK |
0.0805 | 0.0851 | -5.36 | 0.0814 | 0.0820 | -0.71 | 0.0826 |
| Customer satisfaction on a scale of | |||||||
| 1 (very poor) - 10 (very good) | 8.2 | 8.1 | 1.2 | 8.1 | 8.1 | 0.4 | 8.1 |
| Personnel | |||||||
| Average number of employees | 5,161 | 4,919 | 4.9 | 5,055 | 4,896 | 3.2 | 4,906 |
* Revenue, unit revenue per available seat kilometre (RASK), unit cost per available seat kilometre (CASK), unit revenue per revenue passenger kilometre (yield) and Cargo traffic unit revenue per revenue tonne kilometre have been restated for the comparison year 2015. The changes are described in more detail in note 16. Restatement of operating income and key ratios. The adjusted formulas for RASK and CASK are described in note 18. Calculation of key ratios.
| Q1-Q3 | Q1-Q3 | |||||||
|---|---|---|---|---|---|---|---|---|
| in mill. EUR | Q3 2016 | Q3 2015 | Change % | 2016 | 2015 | Change % | 2015 | LTM |
| Revenue | 640.9 | 621.7 | 3.1 | 1,746.9 | 1,686.8 | 3.6 | 2,254.5 | 2,314.6 |
| Other operating income | 16.2 | 18.8 | -13.8 | 56.2 | 63.3 | -11.3 | 85.2 | 78.1 |
| Operating expenses | ||||||||
| Staff costs | -87.4 | -78.5 | 11.4 | -272.2 | -255.9 | 6.4 | -353.2 | -369.6 |
| Fuel costs | -128.7 | -153.4 | -16.1 | -376.6 | -460.4 | -18.2 | -595.5 | -511.7 |
| Other rents | -42.1 | -40.3 | 4.5 | -121.3 | -119.0 | 2.0 | -159.4 | -161.7 |
| Aircraft materials and overhaul | -39.1 | -30.1 | 29.8 | -113.3 | -92.7 | 22.2 | -118.9 | -139.5 |
| Traffic charges | -70.6 | -67.7 | 4.3 | -198.0 | -196.0 | 1.0 | -258.5 | -260.5 |
| Ground handling and catering expenses | -65.8 | -64.2 | 2.4 | -193.2 | -183.6 | 5.2 | -250.3 | -259.9 |
| Expenses for tour operations | -22.1 | -18.0 | 22.7 | -64.6 | -57.1 | 13.0 | -79.6 | -87.1 |
| Sales and marketing expenses | -19.0 | -18.3 | 3.8 | -57.2 | -53.9 | 6.1 | -74.0 | -77.3 |
| Other expenses | -64.0 | -54.9 | 16.7 | -195.6 | -159.9 | 22.3 | -219.3 | -255.0 |
| Comparable EBITDAR | 118.3 | 115.1 | 2.8 | 211.0 | 171.7 | 22.9 | 231.2 | 270.5 |
| Lease payments for aircraft | -27.0 | -24.9 | 8.7 | -82.7 | -71.0 | 16.5 | -99.3 | -111.0 |
| Depreciation and impairment | -25.6 | -26.0 | -1.5 | -74.8 | -77.7 | -3.8 | -108.1 | -105.2 |
| Comparable operating result | 65.7 | 64.2 | 2.3 | 53.5 | 22.9 | 133.2 | 23.7 | 54.3 |
| Fair value changes in derivatives and changes | ||||||||
| in exchange rates of fleet overhauls | 7.4 | -10.9 | > 200 % | 11.7 | 3.2 | > 200 % | -12.3 | -3.7 |
| Items affecting comparability | 42.4 | -2.7 | > 200 % | 32.7 | 10.6 | > 200 % | 110.2 | 132.3 |
| Operating result | 115.5 | 50.7 | 127.8 | 98.0 | 36.7 | 166.7 | 121.7 | 183.0 |
| Financial income | 0.2 | 0.0 | > 200 % | 1.2 | 0.8 | 45.4 | 1.3 | 1.6 |
| Financial expenses | -5.8 | -1.8 | <-200 % | -9.4 | -8.2 | -14.2 | -9.7 | -10.9 |
| Share of results in associates and joint ventures | 0.0 | 0.0 | - | 0.0 | 0.0 | 100.0 | 0.1 | 0.1 |
| Result before taxes | 109.9 | 48.9 | 124.8 | 89.9 | 29.4 | > 200 % | 113.3 | 173.8 |
| Income taxes | -22.3 | -9.8 | -126.8 | -18.4 | -6.1 | <-200 % | -23.6 | -35.9 |
| Result for the period | 87.6 | 39.0 | 124.3 | 71.5 | 23.2 | > 200 % | 89.7 | 137.9 |
| Attributable to | ||||||||
| Owners of the parent company | 87.6 | 38.9 | 125.1 | 71.5 | 23.0 | > 200 % | 89.4 | 137.9 |
| Non-controlling interests | 0.0 | 0.1 | -100.0 | 0.0 | 0.3 | -100.0 | 0.3 | 0.0 |
| Earnings per share attributable to shareholders of the parent company, EUR (basic and diluted) |
0.66 | 0.29 | 128.7 | 0.47 | 0.13 | > 200 % | 0.57 | 0.91 |
| Q1-Q3 | Q1-Q3 | |||||||
|---|---|---|---|---|---|---|---|---|
| in mill. EUR | Q3 2016 | Q3 2015 | Change % | 2016 | 2015 | Change % | 2015 | LTM |
| Result for the period | 87.6 | 39.0 | 124.3 | 71.5 | 23.2 | > 200 % | 89.7 | 137.9 |
| Other comprehensive income items Items that may be reclassified to profit or loss in subsequent periods |
||||||||
| Change in fair value of hedging instruments | 11.1 | -46.1 | > 200 % | 82.8 | 14.3 | > 200 % | -14.1 | 54.5 |
| Translation differences | 0.0 | 0.0 | > 200 % | 0.0 | 0.3 | -95.9 | 0.6 | 0.3 |
| Tax effect | -2.2 | 9.2 | <-200 % | -16.6 | -2.9 | <-200 % | 2.8 | -10.9 |
| Items that will not be reclassified to profit or loss in subsequent periods Actuarial gains and losses from defined benefit plans |
-16.2 | 0.4 | <-200 % | -39.4 | 15.6 | <-200 % | 37.7 | -17.3 |
| Tax effect | 3.2 | -0.1 | > 200 % | 7.9 | -3.1 | > 200 % | -7.5 | 3.5 |
| Other comprehensive income items total | -4.1 | -36.6 | 88.8 | 34.8 | 24.3 | 43.2 | 19.5 | 30.0 |
| Comprehensive income for the period | 83.5 | 2.5 | > 200 % | 106.2 | 47.5 | 123.6 | 109.2 | 167.9 |
| Attributable to | ||||||||
| Owners of the parent company | 83.5 | 2.3 | > 200 % | 106.2 | 47.3 | 124.8 | 108.9 | 167.9 |
| Non-controlling interests | 0.0 | 0.1 | -100.0 | 0.0 | 0.3 | -100.0 | 0.3 | 0.0 |
| in mill. EUR | 30 Sep 2016 | 30 Sep 2015 | 2015 | |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | O | 8.6 | 17.8 | 9.5 |
| Tangible assets | O | 1,106.8 | 836.4 | 811.6 |
| Investments in associates and joint ventures | O | 2.5 | 4.9 | 2.6 |
| Loan and other receivables | O | 8.3 | 9.2 | 8.7 |
| Deferred tax assets | O | 0.0 | 20.7 | 9.1 |
| Non-current assets total | 1,126.2 | 889.0 | 841.5 | |
| Current assets | ||||
| Inventories | O | 13.0 | 12.2 | 11.8 |
| Trade and other receivables | O | 225.5 | 250.7 | 208.5 |
| Derivative financial instruments | O/IA* | 85.5 | 173.1 | 155.8 |
| Other financial assets | IA | 447.5 | 355.3 | 427.7 |
| Cash and cash equivalents | IA | 426.9 | 187.7 | 280.5 |
| Current assets total | 1,198.3 | 979.0 | 1,084.3 | |
| Assets held for sale | O | 140.7 | 87.7 | 124.5 |
| Assets total | 2,465.2 | 1,955.8 | 2,050.3 | |
| EQUITY AND LIABILITIES | ||||
| Equity attributable to owners of the parent | ||||
| Share capital | E | 75.4 | 75.4 | 75.4 |
| Other equity | E | 753.0 | 481.5 | 652.0 |
| Total | 828.5 | 557.0 | 727.5 | |
| Non-controlling interests | E | 0.0 | 0.7 | 0.0 |
| Equity total | 828.5 | 557.7 | 727.5 | |
| Non-current liabilities | ||||
| Deferred tax liabilities | O | 17.2 | 0.0 | 0.0 |
| Interest-bearing liabilities | IL | 577.9 | 295.4 | 271.0 |
| Pension obligations | O | 53.8 | 18.6 | 4.4 |
| Provisions | O | 58.2 | 56.8 | 55.7 |
| Other liabilities | O | 5.0 | 18.2 | 15.8 |
| Non-current liabilities total | 712.1 | 389.0 | 346.9 | |
| Current liabilities | ||||
| Provisions | O | 27.3 | 43.7 | 38.3 |
| Interest-bearing liabilities | IL | 77.2 | 64.4 | 75.2 |
| Trade payables | O | 90.6 | 92.0 | 67.5 |
| Derivative financial instruments | O/IL* | 54.3 | 154.6 | 180.5 |
| Deferred income and advances received | O | 446.7 | 415.6 | 374.8 |
| Liabilities related to employee benefits | O | 87.5 | 76.4 | 91.0 |
| Other liabilities | O | 132.7 | 145.8 | 148.7 |
| Current liabilities total | 916.3 | 992.6 | 976.0 | |
| Liabilities related to assets held for sale | O | 8.3 | 16.6 | 0.0 |
| Liabilities total | 1,636.7 | 1,398.1 | 1,322.9 | |
| Equity and liabilities total | 2,465.2 | 1,955.8 | 2,050.3 |
Finnair reports its interest-bearing debt, net debt and adjusted gearing to give an overview of Finnair's financial position. Balance sheet items included in interest-bearing net debt are marked with an "IA" or "IL". The calculation of capital employed includes items marked with an "E" or "IL". Other items are marked with an "O".
| Additional information to Balance Sheet: Interest-bearing net-debt and adjusted gearing | 30 Sep 2016 | 30 Sep 2015 | 2015 |
|---|---|---|---|
| Other financial assets | -447.5 | -355.3 | -427.7 |
| Cash and cash equivalents | -426.9 | -187.7 | -280.5 |
| Interest-bearing liabilities | 655.0 | 359.3 | 346.5 |
| Cross currency Interest rate swaps * | 2.8 | 0.5 | -0.2 |
| Interest-bearing net debt | -216.5 | -183.2 | -362.0 |
| Lease payments for aircraft for the last twelve months (LTM) * 7 | 777.1 | 645.4 | 695.2 |
| Interest-bearing net debt used for calculating adjusted gearing | 560.6 | 462.2 | 333.2 |
| Equity total | 828.5 | 557.7 | 727.5 |
| Adjusted gearing, % | 67.7 % | 82.9 % | 45.8 % |
* Cross-currency interest rate swaps are used for hedging the currency and interest rate risk of interest-bearing loans, but hedge accounting is not applied. Changes in fair net value correlate with changes in the fair value of interest-bearing liabilities. Therefore, the fair net value of crosscurrency interest rate swaps recognised in derivative assets/liabilities and reported in Note 5, is considered an interest-bearing liability in the net debt calculation. 17
| in mi ll. E UR |
Sh ita l are ca p |
Ot he r tric ted res fun ds |
He dg ing nd res erv e a oth O CI er ite ms |
Un tric ted res uity fu nd eq s |
Re tai d ne rni ea ng s |
Hy bri d b d on |
Eq uit y rib ble att uta of to ow ne rs the nt p are |
No n olli ntr co ng inte ts res |
Eq uit al tot y |
|---|---|---|---|---|---|---|---|---|---|
| Eq uit 1 J 20 16 y an |
75 .4 |
16 8.1 |
-67 .9 |
24 8.1 |
67 .6 |
23 6.2 |
72 7.5 |
0.0 | 72 7.5 |
| Re lt fo r th eri od su e p |
71 .5 |
71 .5 |
0.0 | 71 .5 |
|||||
| Ch e i n f air lue of he dg ing in str ts an g va um en |
66 .3 |
66 .3 |
66 .3 |
||||||
| fro fin fit de ed be lan m ne p s |
-31 .5 |
-31 .5 |
-31 .5 |
||||||
| Co reh siv e i e f the eri od mp en nc om or p |
0.0 | 0.0 | 34 .8 |
0.0 | 71 .5 |
0.0 | 10 6.2 |
0.0 | 10 6.2 |
| Hy bri d b d i nte ts d e on res an xp en se s |
-1. 4 |
-1. 4 |
-1. 4 |
||||||
| Pu rch f o sh as e o wn are s |
-4. 3 |
-4. 3 |
-4. 3 |
||||||
| Sh -ba d p nts are se ay me |
0.4 | 0.4 | 0.4 | ||||||
| uit Se Eq 30 20 16 p y |
75 .4 |
16 8.1 |
-33 .1 |
24 8.5 |
13 3.4 |
23 6.2 |
82 8.5 |
0.0 | 82 8.5 |
| Ot he r tric ted res |
He dg ing nd res erv e a oth O CI er |
Un tric ted res |
Re tai d ne |
Eq uit y rib ble att uta of to ow ne rs |
No n olli ntr co ng |
||||
|---|---|---|---|---|---|---|---|---|---|
| in mi ll. E UR |
Sh ita l are ca p |
fun ds |
ite ms |
fu uity nd eq s |
rni ea ng s |
Hy bri d b d on |
the nt p are |
inte ts res |
Eq uit al tot y |
| Eq uit 1 J 20 15 y an |
75 .4 |
16 8.1 |
-87 .4 |
24 7.4 |
-8. 8 |
11 8.9 |
51 3.7 |
0.6 | 51 4.3 |
| lt fo Re r th eri od su e p |
23 .0 |
23 .0 |
0.3 | 23 .2 |
|||||
| Ch e i n f air lue of he dg ing in str ts an g va um en |
11 .4 |
11 .4 |
11 .4 |
||||||
| fro de fin ed be fit lan m ne p s |
12 .5 |
12 .5 |
12 .5 |
||||||
| ffe Tra lat ion di ns ren ce s |
0.3 | 0.3 | 0.3 | ||||||
| Co reh siv e i e f the eri od mp en nc om or p |
0.0 | 0.0 | 24 .3 |
0.0 | 23 .0 |
0.0 | 47 .3 |
0.3 | 47 .5 |
| Div ide nd |
0.0 | -0. 2 |
-0. 2 |
||||||
| Sh -ba d p nts are se ay me |
0.2 | 0.2 | 0.2 | ||||||
| Hy bri d b d i d e nte ts on res an xp en se s |
-4. 3 |
-4. 3 |
-4. 3 |
||||||
| Eq uit 30 Se 20 15 p y |
75 .4 |
16 8.1 |
-63 .1 |
24 7.7 |
9.9 | 11 8.9 |
55 7.0 |
0.7 | 55 7.7 |
| Q1-Q3 | Q1-Q3 | |||||
|---|---|---|---|---|---|---|
| in mill. EUR | Q3 2016 | Q3 2015 | 2016 | 2015 | 2015 | LTM |
| Cash flow from operating activities | ||||||
| Result for the period | 87.6 | 39.0 | 71.5 | 23.2 | 89.7 | 137.9 |
| Depreciation and impairment | 26.4 | 27.1 | 79.1 | 93.3 | 148.5 | 134.2 |
| Other adjustments to result for the period | ||||||
| Financial income | -0.2 | 0.0 | -1.2 | -0.8 | -1.3 | -1.6 |
| Financial expenses | 5.8 | 1.8 | 9.4 | 8.2 | 9.7 | 10.9 |
| Share of results in associates and joint ventures | 0.0 | 0.0 | 0.0 | 0.0 | -0.1 | -0.1 |
| Income taxes | 22.3 | 9.8 | 18.4 | 6.1 | 23.6 | 35.9 |
| EBITDA | 141.8 | 77.8 | 177.1 | 130.1 | 270.2 | 317.2 |
| Non-cash transactions * | -45.3 | 21.9 | -40.6 | -26.2 | -137.5 | -151.9 |
| Changes in working capital | -42.1 | -36.8 | 48.5 | 63.3 | 43.1 | 28.3 |
| Financial expenses paid, net | 1.5 | -1.5 | -1.9 | -5.8 | -7.6 | -3.8 |
| Financial income received | 3.2 | 1.1 | 6.2 | 2.7 | 3.0 | 6.5 |
| Income taxes paid | 0.0 | 0.0 | 0.0 | -0.2 | -0.2 | 0.0 |
| Net cash flow from operating activities | 59.1 | 62.6 | 189.2 | 164.0 | 171.0 | 196.3 |
| Cash flow from investing activities | ||||||
| Investments in intangible assets | -2.5 | -2.3 | -7.1 | -4.5 | -4.3 | -6.9 |
| Investments in tangible assets | -124.3 | -40.4 | -436.0 | -116.6 | -352.5 | -671.9 |
| Divestments of fixed assets and group shares | 132.3 | -0.3 | 149.4 | 152.2 | 448.1 | 445.3 |
| Net change in financial interest-bearing assets at fair value | ||||||
| through profit or loss, maturing after more than three months | 156.3 | 40.2 | 58.5 | 55.3 | -14.4 | -11.3 |
| Change in non-current receivables | -0.3 | 0.1 | 0.4 | 0.0 | 1.7 | 2.1 |
| Net cash flow from investing activities | 161.5 | -2.8 | -234.8 | 86.4 | 78.6 | -242.7 |
| Cash flow from financing activities | ||||||
| Proceeds from loans | 0.0 | 0.0 | 377.4 | 0.0 | 0.0 | 377.4 |
| Loan repayments and changes | -71.6 | -8.8 | -101.2 | -72.7 | -82.5 | -111.0 |
| Hybrid bond repayments | 0.0 | 0.0 | 0.0 | 0.0 | -81.7 | -81.7 |
| Proceeds from hybrid bond | 0.0 | 0.0 | 0.0 | 0.0 | 200.0 | 200.0 |
| Hybrid bond interests and expenses | 0.0 | 0.0 | -1.7 | -5.3 | -17.6 | -13.9 |
| Purchase of own shares | 0.0 | 0.0 | -4.3 | 0.0 | 0.0 | -4.3 |
| Dividends paid | 0.0 | 0.0 | 0.0 | -0.2 | -0.2 | 0.0 |
| Net cash flow from financing activities | -71.6 | -8.8 | 270.2 | -78.2 | 18.1 | 366.5 |
| Change in cash flows | 149.0 | 51.0 | 224.6 | 172.2 | 267.7 | 320.0 |
| Liquid funds, at beginning | 533.3 | 311.2 | 457.7 | 190.1 | 190.1 | 362.3 |
| Change in cash flows | 149.0 | 51.0 | 224.6 | 172.2 | 267.7 | 320.0 |
| Liquid funds, at end ** | 682.3 | 362.3 | 682.3 | 362.3 | 457.7 | 682.3 |
| Notes to consolidated cash flow statement | ||||||
| * Non-cash transactions | ||||||
| Employee benefits | 3.2 | 2.9 | 10.5 | 9.2 | 15.6 | 16.9 |
| Fair value changes in derivatives | -6.6 | 11.1 | -9.7 | -9.6 | 2.1 | 2.0 |
| Gains and losses on aircraft and other transactions | -42.2 | 1.7 | -33.5 | -18.6 | -121.5 | -136.4 |
| Other adjustments | 0.4 | 6.1 | -7.9 | -7.3 | -33.7 | -34.3 |
| Total | -45.3 | 21.9 | -40.6 | -26.2 | -137.5 | -151.9 |
| ** Liquid funds | ||||||
| Other financial assets | 447.5 | 355.3 | 447.5 | 355.3 | 427.7 | 447.5 |
| Cash and cash equivalents | 426.9 | 187.7 | 426.9 | 187.7 | 280.5 | 426.9 |
| Liquid funds in balance sheet | 874.3 | 543.0 | 874.3 | 543.0 | 708.2 | 874.3 |
| Maturing after more than three months | -192.0 | -180.7 | -192.0 | -180.7 | -250.5 | -192.0 |
| Total | 682.3 | 362.3 | 682.3 | 362.3 | 457.7 | 682.3 |
This Consolidated Interim Report has been prepared according to the International (IAS) Standard 34: Interim Financial Reporting.
The accounting principles applied are disclosed in the 2015 Consolidated Financial Statements. The figures presented in this statement are not rounded; therefore, the total sum of individual figures does not necessarily match the corresponding sum stated herein. The key figures stated here are calculated using the exact figures.
Finnair has revised the calculation of revenue. From the beginning of 2016 onwards, revenue from non-core businesses, mainly including aircraft leasing income, is reclassified from revenue to other operating income. Comparative periods have been restated accordingly. The changes are described in more detail in Note 16. Restatement of operating income and key ratios.
Finnair has adopted the Guidelines on Alternative Performance Measures published by the European Securities Markets Authority (ESMA), effective from 3rd of July 2016 onwards. Finnair uses alternative performance measures referred to in the Guidelines to describe its operational and financial performance, to provide a comparable view of its business and to enable better comparability relative to its industry peers. The alternative performance measures do not replace IFRS indicators. With a view to the Guidelines, in the interim report for the first quarter, Finnair renamed its non-recurring items as "Items affecting comparability" and from there on, it reconciles them in Note 4, "Segment information, revenue and items affecting comparability". In the same context, Finnair also clarified the calculation of interest-bearing debt, net debt and adjusted gearing by inserting additional information to the balance sheet. Furthermore, Finnair no longer presents "Result for the period per share, EUR" as a supplementary indicator to the EPS (Earnings per Share).
The preparation of the interim report requires the company's management to make estimates and assumptions that influence the levels of reported assets and liabilities as well as of revenue and expenses. The actual outcome may differ from the estimates made. The critical accounting estimates and sources of uncertainty are disclosed in the financial statements 2015.
Due to Finnair's recent business developments and restructuring of organisation, Finnair Executive Board, defined as the chief operative decision maker according to IFRS 8 Segment reporting, considers the business as one operating segment. Therefore, segment information is no longer reported. The previous operational segment Travel Services is combined with the Airline Business segment.
| Q1-Q3 | Q1-Q3 | ||||||
|---|---|---|---|---|---|---|---|
| in mill. EUR | Q3 2016 | Q3 2015 | Change % | 2016 | 2015 | Change % | 2015 |
| Passenger revenue | 515.9 | 504.4 | 2.3 | 1,378.1 | 1,333.1 | 3.4 | 1,766.0 |
| Ancillary and retail revenue | 33.8 | 27.7 | 22.2 | 93.7 | 75.1 | 24.8 | 103.2 |
| Cargo | 45.5 | 45.9 | -0.9 | 127.7 | 135.7 | -5.9 | 183.7 |
| Travel services | 42.0 | 38.3 | 9.8 | 135.2 | 125.1 | 8.1 | 177.8 |
| Travel agencies | 3.7 | 5.5 | -31.9 | 12.1 | 17.8 | -32.1 | 23.8 |
| Total | 640.9 | 621.7 | 3.1 | 1,746.9 | 1,686.8 | 3.6 | 2,254.5 |
| Q1-Q3 | Q1-Q3 | ||||||
|---|---|---|---|---|---|---|---|
| Passenger revenue, mill. EUR | Q3 2016 | Q3 2015 | Change % | 2016 | 2015 | Change % | 2015 |
| Asia | 224.9 | 222.3 | 1.2 | 563.7 | 560.7 | 0.5 | 729.7 |
| North Atlantic | 38.4 | 33.2 | 15.5 | 92.9 | 80.3 | 15.7 | 105.6 |
| Europe | 213.8 | 207.3 | 3.1 | 578.9 | 557.3 | 3.9 | 738.0 |
| Domestic | 31.1 | 32.3 | -3.7 | 119.4 | 111.2 | 7.4 | 155.9 |
| Unallocated revenue | 7.8 | 9.3 | -16.3 | 23.2 | 23.6 | -1.5 | 36.9 |
| Total | 515.9 | 504.4 | 2.3 | 1,378.1 | 1,333.1 | 3.4 | 1,766.0 |
| Q1-Q3 | Q1-Q3 | ||||||
|---|---|---|---|---|---|---|---|
| PLF, % | Q3 2016 | Q3 2015 | Change % | 2016 | 2015 | Change % | 2015 |
| Asia | 87.0 | 90.4 | -3.3 %-p | 82.2 | 83.7 | -1.5 %-p | 82.8 |
| North Atlantic | 81.2 | 88.3 | -7.1 %-p | 80.2 | 84.7 | -4.4 %-p | 83.1 |
| Europe | 82.8 | 82.0 | 0.8 %-p | 79.2 | 78.8 | 0.3 %-p | 78.5 |
| Domestic | 68.4 | 66.1 | 2.3 %-p | 69.1 | 68.3 | 0.8 %-p | 68.0 |
| Total | 84.2 | 85.8 | -1.5 %-p | 80.3 | 81.1 | -0.8 %-p | 80.4 |
| Q1-Q3 Q1-Q3 |
|||||||
|---|---|---|---|---|---|---|---|
| ASK, mill. km | Q3 2016 | Q3 2015 | Change % | 2016 | 2015 | Change % | 2015 |
| Asia | 4,332.1 | 3,848.1 | 12.6 | 12,423.7 | 11,461.7 | 8.4 | 15,256.5 |
| North Atlantic | 798.5 | 654.4 | 22.0 | 2,102.9 | 1,645.0 | 27.8 | 2,242.5 |
| Europe | 3,656.8 | 3,566.5 | 2.5 | 10,069.0 | 9,778.7 | 3.0 | 12,890.3 |
| Domestic | 299.2 | 314.5 | -4.8 | 1,124.3 | 1,034.9 | 8.6 | 1,446.5 |
| Total | 9,086.7 | 8,383.4 | 8.4 | 25,719.9 | 23,920.3 | 7.5 | 31,835.7 |
| Q1-Q3 | Q1-Q3 | ||||||
|---|---|---|---|---|---|---|---|
| RPK, mill. km | Q3 2016 | Q3 2015 | Change % | 2016 | 2015 | Change % | 2015 |
| Asia | 3,770.5 | 3,477.2 | 8.4 | 10,208.5 | 9,591.1 | 6.4 | 12,629.3 |
| North Atlantic | 648.4 | 577.7 | 12.2 | 1,687.2 | 1,392.8 | 21.1 | 1,863.0 |
| Europe | 3,029.6 | 2,926.1 | 3.5 | 7,972.1 | 7,708.3 | 3.4 | 10,115.9 |
| Domestic | 204.8 | 207.9 | -1.5 | 777.2 | 707.3 | 9.9 | 983.4 |
| Total | 7,653.3 | 7,188.9 | 6.5 | 20,645.0 | 19,399.5 | 6.4 | 25,591.6 |
Finnair renamed in Q1 2016 items previously called "Non-recurring" to "Items affecting comparability" and provides reconciliation of the item in the notes. Items affecting comparability are classified into three categories: Gains and losses on aircraft transactions, Gains and losses on other transactions and Restructuring costs. Gains and losses on transactions include sales gains and losses and other items that can be considered to be directly related to the sale of the asset. As an example, write-down that might occur when item is classified as assets held for sale according IFRS 5, is reported as gains and losses on transactions. Restructuring costs include termination benefits and other costs that are directly linked to restructurings of operations.
| Q1-Q3 | Q1-Q3 | ||||||
|---|---|---|---|---|---|---|---|
| in mill. EUR | Q3 2016 | Q3 2015 | Change % | 2016 | 2015 | Change % | 2015 |
| Fair value changes in derivatives and changes in | |||||||
| exchange rates of fleet overhauls | 7.4 | -10.9 | > 200 % | 11.7 | 3.2 | > 200 % | -12.3 |
| Unrealized changes in foreign currencies of fleet | |||||||
| overhaul provisions | 0.8 | 0.2 | > 200 % | 2.0 | -6.5 | > 200 % | -10.1 |
| Fair value changes of derivatives where hedge | |||||||
| accounting is not applied | 6.6 | -11.1 | > 200 % | 9.7 | 9.6 | 1.0 | -2.1 |
| Items affecting comparability | 42.4 | -2.7 | > 200 % | 32.7 | 10.6 | > 200 % | 110.2 |
| Gains and losses on aircraft transactions | 41.5 | -3.0 | > 200 % | 33.3 | 17.2 | 93.3 | 101.7 |
| Gains and losses on other transactions | 0.8 | 1.3 | -41.3 | 0.2 | 1.3 | -88.2 | 19.8 |
| Restructuring costs | 0.1 | -0.9 | > 200 % | -0.7 | -7.9 | 90.9 | -11.3 |
No significant changes have been made to the Group's risk management principles in the reporting period. The objectives and principles of risk management are consistent with the information presented in the Group's 2015 financial statements. The tables below present the nominal value or the amount and net fair value of derivative contracts used in Group's hedge accounting.
| Derivatives, in mill. EUR Nominal Fair net Nominal Fair net Nominal Fair net value value value value value value Currency derivatives Hedge accounting items (forward contracts): Jet fuel currency hedging 290.7 0.8 338.1 26.0 331.6 23.1 Fair value hedging of aircraft acquisitions 361.7 52.7 712.6 96.5 782.4 81.0 Currency hedging of lease payments 152.1 4.2 156.2 17.2 171.2 18.1 Hedge accounting items total 804.5 57.8 1,207.0 139.7 1,285.3 122.2 Items outside hedge accounting: Operational cash flow hedging (forward contracts) 188.6 -2.8 240.9 16.1 307.5 14.8 Operational cash flow hedging (options) Bought options 150.3 1.8 79.0 5.3 180.4 3.7 Sold options 236.5 -8.5 39.5 -4.8 318.5 -4.1 Balance sheet hedging (forward contracts) 211.9 -0.8 10.4 0.1 11.5 0.4 Items outside hedge accounting total 787.2 -10.4 369.8 16.6 817.8 14.7 Currency derivatives total 1,591.7 47.4 1,576.8 156.3 2,103.1 136.9 Commodity derivatives Hedge accounting items: Jet fuel forward contracts, tonnes 641,000 -22.2 538,000 -114.3 559,000 -140.7 Electricity derivatives, MWh 13,141 0.0 14,245 -0.1 13,140 0.0 Hedge accounting items total -22.2 -114.3 -140.8 Items outside hedge accounting: |
|---|
| Jet fuel forward contracts, tonnes 24,000 -0.6 17,000 -2.3 26,000 -4.2 |
| Options |
| Bought options, jet fuel, tonnes 195,000 5.2 170,500 0.8 178,000 0.6 |
| Sold options, jet fuel, tonnes 390,000 -3.1 -276,500 -19.5 329,000 -26.2 |
| Electricity derivatives, MWh 6,628 0.0 33,865 -0.4 26,352 -0.3 |
| Items outside hedge accounting total 1.5 -21.4 -30.2 |
| Commodity derivatives total -20.8 -135.7 -170.9 |
| Currency and interest rate swaps and options |
| Hedge accounting items: |
| Interest rate swaps 150.0 4.4 150.0 5.3 150.0 5.2 |
| Interest rate options |
| Bought options 0.0 0.0 133.9 -5.6 0.0 0.0 |
| Sold options 0.0 0.0 133.9 -2.8 0.0 0.0 |
| Hedge accounting items total 150.0 4.4 417.8 -3.1 150.0 5.2 |
| Items outside hedge accounting: |
| Cross currency Interest rate swaps 280.0 -2.8 9.3 -0.5 7.1 -0.2 |
| Items outside hedge accounting total 280.0 -2.8 9.3 -0.5 7.1 -0.2 |
| Interest rate derivatives total 430.0 1.6 427.1 -3.6 157.1 5.0 |
| Equity derivatives |
| Hedge accounting items: |
| Stock options |
| Bought options 3.0 2.9 3.0 1.2 3.0 5.6 |
| Sold options 3.0 -0.4 3.0 -0.2 3.0 -1.4 |
| Hedge accounting items total 6.0 2.5 6.0 1.0 6.0 4.1 |
| Equity derivatives total 6.0 2.5 6.0 1.0 6.0 4.1 |
| Derivatives total 30.8 18.0 -24.9 |
| Fair value hierarchy of financial assets and liabilities valued at fair value | |||
|---|---|---|---|
| Fair values at the end of the reporting period, in mill. EUR | 30 Sep 2016 | Level 1 | Level 2 |
| Financial assets at fair value through profit and loss | |||
| Securities held for trading | 438.1 | 36.0 | 402.1 |
| Derivatives held for trading | |||
| Currency and interest rate swaps and options | 5.1 | 5.1 | |
| - of which in fair value hedge accounting | 4.5 | 4.5 | |
| Currency derivatives | 64.5 | 64.5 | |
| - of which in fair value hedge accounting | 53.0 | 53.0 | |
| - of which in cash flow hedge accounting | 6.8 | 6.8 | |
| Commodity derivatives | 13.0 | 13.0 | |
| - of which in cash flow hedge accounting | 7.7 | 7.7 | |
| Equity derivatives | 2.9 | 2.9 | |
| - of which in fair value hedge accounting | 2.9 | 2.9 | |
| Total | 523.6 | 36.0 | 487.6 |
| Financial liabilities recognised at fair value through profit and loss | |||
| Total | 54.8 | 0.0 | 54.8 |
|---|---|---|---|
| - of which in fair value hedge accounting | 0.4 | 0.4 | |
| Equity derivatives | 0.4 | 0.4 | |
| - of which in cash flow hedge accounting | 29.9 | 29.9 | |
| Commodity derivatives | 33.8 | 33.8 | |
| - of which in cash flow hedge accounting | 1.8 | 1.8 | |
| - of which in fair value hedge accounting | 0.3 | 0.3 | |
| Currency derivatives | 17.1 | 17.1 | |
| Currency and interest rate swaps and options | 3.4 | 3.4 | |
| Derivatives held for trading |
During the reporting period no significant transfers took place between fair value hierarchy Levels 1 and 2.
The fair values of hierarchy Level 1 are based fully on quoted (unadjusted) prices in active markets of the same assets and liabilities. The fair values of Level 2 instruments are based to a significant extent on input data other than the quoted prices included in Level 1, but however on data that are observable either directly (price) or indirectly (derived from price) for the said asset or liability.
The fair value hierarchy level, to which a certain item valued at fair value is classified in its entirety, is determined in accordance with the requirements of IFRS 7 based on the lowest level of input significant to the overall fair value of the said item. The significance of the input data has been assessed in its entirety in relation to said item valued at fair value.
Finnair did not have any business acquisitions nor divestments during third quarter. During the second quarter of 2016 the Group acquired ATR maintenance business from Nordic Regional Airlines Oy and divested its ownership in associated company Amadeus Eesti AS. The transactions did not have material effect to Finnair's results.
At the end of the first quarter of 2015, Flybe Nordic group, the joint venture of Finnair and Flybe Group plc was transferred temporarily to Finnair's ownership as Finnair acquired Flybe Group plc's 60% share of Flybe Nordic with one euro on an interim basis. Later on Flybe Nordic was renamed as Nordic Regional Airlines (Norra). Norra was classified as assets held for sale until Finnair further sold the 60% share to Staffpoint Holding Oy and Kilco Oy in Q4 2015. Due to the sale Norra became a joint venture of Finnair and the new owners.
At the end of 2015, Finnair sold its ownership in the Estonian subsidiary Estravel AS, including Estravel's Lithuanian subsidiary Estravel Vilnius UAB. The transaction did not have material effect to Finnair's results.
The effective tax rate for Q1-Q3 2016 was 20.5% (20.9%).
The Annual General Meeting on 17 March 2016 decided that no dividend was paid for 2015. The Annual General Meeting on 25 March 2015 decided that no dividend was paid for 2014.
| in mill. EUR | 30 Sep 2016 | 30 Sep 2015 | 2015 |
|---|---|---|---|
| Carrying amount at the beginning of period | 821.0 | 916.2 | 916.2 |
| Additions | 424.0 | 38.2 | 329.7 |
| Change in advances | 50.9 | 80.6 | 28.9 |
| Currency hedging of aircraft acquisitions | 28.2 | -30.3 | -14.7 |
| Disposals and reclassifications | -132.0 | -57.2 | -290.6 |
| Depreciation | -74.8 | -77.7 | -108.1 |
| Depreciation included in items affecting comparability | -1.9 | -15.6 | -40.4 |
| Carrying amount at the end of period | 1,115.5 | 854.2 | 821.0 |
| Proportion of assets held for sale at the beginning of period | 123.0 | 119.8 | 119.8 |
| Proportion of assets held for sale at the end of period | 132.0 | 63.3 | 123.0 |
Non-current assets held for sale include mainly aircraft. Aircraft classified as held for sale include four A340 aircraft of which two are expected to be sold to Airbus during 2016 and two during 2017. These wide-body aircrafts have been replaced or are going to be replaced by new A350 aircraft. In addition, assets held for sale include one ATR 72 aircraft, expected to be sold in the first half of 2017, and a subsidiary SMT Oy that is expected to be sold during Q4 2016. At the end of 2015, assets held for sale also included two Embraer E170, which were sold at the first quarter of 2016.
At the end of the first quarter of 2015 Flybe Nordic Group, the joint venture of Finnair and Flybe Group plc, was transferred temporarily to Finnair's ownership as Finnair acquired Flybe Group plc's 60% share of Flybe Nordic with one euro on an interim basis. The ownership interest acquired was classified as assets held for sale. Later on Flybe Nordic was renamed as Nordic Regional Airlines (Norra). The 60% share of Norra was further sold to Staffpoint Holding Oy and Kilco Oy in Q4 2015.
| Non-current assets held for sale | 30 Sep 2016 | 30 Sep 2015 | 2015 |
|---|---|---|---|
| Intangible and tangible assets | 132.0 | 63.3 | 123.0 |
| Inventories | 1.4 | 0.1 | 1.6 |
| Trade receivables and other receivables | 7.2 | 0.0 | 0.0 |
| Assets from subsidiary held for sale | 0.0 | 24.3 | 0.0 |
| Total | 140.7 | 87.7 | 124.5 |
| Liabilities of non-current assets held for sale | 30 Sep 2016 | 30 Sep 2015 | 2015 |
|---|---|---|---|
| Trade payables and other liabilities | 8.3 | 0.0 | 0.0 |
| Liabilities from subsidiary held for sale | 0.0 | 16.6 | 0.0 |
| Total | 8.3 | 16.6 | 0.0 |
During the first quarter of 2016, Finnair secured financing for its third Airbus A350 aircraft using a Japanese Operating Lease with Call Option (JOLCO) structure. The transaction is treated as a loan and the owned aircraft in Finnair's accounting.
During the second quarter of 2016, Finnair financed the acquisitions of the fourth and fifth A350 aircraft using a similar type of Japanese Operating Lease with Call Option (JOLCO) structure.
During the third quarter Finnair prepaid its bank loans with total amount of 67 million euro.
| in mill. EUR | 30 Sep 2016 | 30 Sep 2015 | 2015 |
|---|---|---|---|
| Pledges on own behalf | 53.8 | 158.6 | 160.1 |
| Guarantees on behalf of group undertakings | 73.0 | 69.6 | 67.0 |
| Guarantees on behalf of others | 0.1 | 0.1 | 0.1 |
| Total | 126.8 | 228.3 | 227.2 |
Investment commitments for property, plant and equipment as at 30 September 2016 totalled 1,542 million euros (31 December 2015: 1,818).
| in mill. EUR | 30 Sep 2016 | 30 Sep 2015 | 2015 |
|---|---|---|---|
| Lease commitments for fleet payments | 1,040.6 | 741.0 | 1,040.3 |
| Other lease commitments | 296.7 | 308.8 | 305.2 |
| Total | 1,337.3 | 1,049.9 | 1,345.5 |
| in mill. EUR | Q1-Q3 2016 | Q1-Q3 2015 | 2015 |
|---|---|---|---|
| Sales of goods and services | |||
| Associates | 0.0 | 0.2 | 0.2 |
| Joint ventures | 32.1 | 13.7 | 49.3 |
| Purchases of goods and services | |||
| Associates | 0.0 | 3.0 | 2.5 |
| Joint ventures | 82.1 | 44.9 | 126.7 |
| Pension fund | 2.4 | 3.5 | 4.5 |
| Receivables | |||
| Current receivables from associates | 0.0 | 0.1 | 0.5 |
| Current receivables from joint ventures | 9.0 | 0.0 | 12.1 |
| Liabilities | |||
| Non-current liabilities to pension fund | 51.6 | 18.6 | 2.6 |
| Current liabilities to associates | 0.0 | 2.1 | 0.9 |
| Current liabilities to joint ventures | 0.3 | 0.0 | 0.1 |
Finnair has revised the calculation of revenue. From the beginning of 2016 onwards revenue from non-core businesses, mainly including aircraft leasing income, are reclassified from revenue to other operating income.
As of 2016, Finnair has adjusted calculation methods of unit revenue (RASK, unit revenue per available seat kilometre), unit cost (CASK, unit cost per available seat kilometre), unit revenue per revenue passenger kilometre (yield) and cargo unit revenue (Cargo traffic unit revenue per revenue tonne kilometre). The previous calculation formulas included internal items which could not be derived straight from the Group's income statement. The purpose of this change is to improve transparency and the usability of these key figures for investors.
Revenue, other operating income, RASK and CASK of comparative periods have been restated to correspond to the changed calculation methods, the restated quarterly 2015 key ratios are presented in the tables below. The adjusted formulas for RASK and CASK are described in note 18. Calculation of key ratios.
| Consolidated Income Statement | Restated | Reported | ||||||
|---|---|---|---|---|---|---|---|---|
| Periodic in mill. EUR | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 |
| Revenue | 567.7 | 621.7 | 543.9 | 521.3 | 585.5 | 637.1 | 561.0 | 540.4 |
| Other operating income | 21.9 | 18.8 | 21.5 | 23.0 | 4.1 | 3.4 | 4.4 | 3.8 |
| Consolidated Income Statement | Restated | Reported | ||||||
|---|---|---|---|---|---|---|---|---|
| Cumulative in mill. EUR | 2015 Q1-Q3 2015 Q1-Q2 2015 | Q1 2015 | 2015 Q1-Q3 2015 Q1-Q2 2015 | Q1 2015 | ||||
| Revenue | 2,254.5 | 1,686.8 | 1,065.2 | 521.3 | 2,324.0 | 1,738.5 | 1,101.4 | 540.4 |
| Other operating income | 85.2 | 63.3 | 44.5 | 23.0 | 15.7 | 11.6 | 8.2 | 3.8 |
| Restated | Reported | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Periodic key figures | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 | |
| Revenue and result | |||||||||
| Comparable operating result, | |||||||||
| % of revenue | 0.1 | 10.3 | -2.4 | -5.4 | 0.1 | 10.1 | -2.3 | -5.2 | |
| Traffic data | |||||||||
| Unit revenue per available seat kilometre, (RASK), cents/ASK |
7.17 | 7.42 | 6.95 | 6.76 | 6.30 | 6.73 | 6.29 | 6.05 | |
| Unit cost per available seat kilometre (CASK), cents/ASK |
7.16 | 6.65 | 7.12 | 7.12 | 6.50 | 6.12 | 6.74 | 6.75 | |
| CASK excluding fuel, cents/ASK Cargo traffic unit revenue per |
5.46 | 4.82 | 5.13 | 5.16 | 4.81 | 4.31 | 4.74 | 4.82 | |
| revenue tonne kilometre, cents/RTK | 22.89 | 22.13 | 23.77 | 24.82 | 21.22 | 20.39 | 21.95 | 23.28 | |
| Unit revenue per revenue passenger kilometre (yield), cents/RPK |
6.99 | 7.02 | 7.02 | 6.55 | 6.88 | 6.92 | 6.97 | 6.59 |
| Restated | Reported | |||||||
|---|---|---|---|---|---|---|---|---|
| Cumulative key figures | 2015 Q1-Q3 2015 Q1-Q2 2015 | Q1 2015 | 2015 Q1-Q3 2015 Q1-Q2 2015 | Q1 2015 | ||||
| Revenue and result | ||||||||
| Comparable operating result, | ||||||||
| % of revenue | 1.1 | 1.4 | -3.9 | -5.4 | 1.0 | 1.3 | -3.7 | -5.2 |
| Traffic data | ||||||||
| Unit revenue per available seat kilometre, (RASK), cents/ASK Unit cost per available seat |
7.08 | 7.05 | 6.86 | 6.76 | 6.35 | 6.39 | 6.17 | 6.05 |
| kilometre (CASK), cents/ASK | 7.01 | 6.96 | 7.12 | 7.12 | 6.52 | 6.55 | 6.75 | 6.75 |
| CASK excluding fuel, cents/ASK Cargo traffic unit revenue per |
5.14 | 5.03 | 5.15 | 5.16 | 4.67 | 4.63 | 4.78 | 4.82 |
| revenue tonne kilometre, cents/RTK Unit revenue per revenue passenger kilometre (yield), |
23.34 | 23.51 | 24.28 | 24.82 | 21.64 | 21.80 | 22.60 | 23.28 |
| cents/RPK | 6.90 | 6.87 | 6.79 | 6.55 | 6.85 | 6.84 | 6.78 | 6.59 |
| Revenue by product | Restated | Reported | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Periodic in mill. EUR | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 | |
| Passenger revenue | 433.0 | 504.4 | 434.4 | 394.3 | 430.4 | 503.5 | 433.6 | 382.1 | |
| Ancillary and retail revenue | 28.0 | 27.7 | 24.4 | 23.1 | 28.4 | 28.0 | 24.7 | 23.4 | |
| Cargo | 48.0 | 45.9 | 45.1 | 44.8 | 48.0 | 45.9 | 45.1 | 44.8 | |
| Other revenue | 18.5 | 14.9 | 16.3 | 29.3 | |||||
| Travel Services segment | 60.1 | 44.8 | 41.2 | 60.8 | |||||
| Travel services | 52.7 | 38.3 | 33.5 | 53.3 | |||||
| Travel agencies | 6.0 | 5.5 | 6.5 | 5.8 | |||||
| Total | 567.7 | 621.7 | 543.9 | 521.3 | 585.5 | 637.1 | 561.0 | 540.4 |
| Revenue by product | Restated Reported |
|||||||
|---|---|---|---|---|---|---|---|---|
| Cumulative in mill. EUR | 2015 Q1-Q3 2015 Q1-Q2 2015 | Q1 2015 | 2015 Q1-Q3 2015 Q1-Q2 2015 | Q1 2015 | ||||
| Passenger revenue | 1,766.0 | 1,333.1 | 828.7 | 394.3 | 1,749.7 | 1,319.3 | 815.7 | 382.1 |
| Ancillary and retail revenue | 103.2 | 75.1 | 47.5 | 23.1 | 104.6 | 76.2 | 48.2 | 23.4 |
| Cargo | 183.7 | 135.7 | 89.9 | 44.8 | 183.7 | 135.7 | 89.9 | 44.8 |
| Other revenue | 79.1 | 60.5 | 45.7 | 29.3 | ||||
| Travel Services segment | 206.9 | 146.8 | 102.0 | 60.8 | ||||
| Travel services | 177.8 | 125.1 | 86.8 | 53.3 | ||||
| Travel agencies | 23.8 | 17.8 | 12.3 | 5.8 | ||||
| Total | 2,254.5 | 1,686.8 | 1,065.2 | 521.3 | 2,324.0 | 1,738.5 | 1,101.4 | 540.4 |
There has not been any material events after the closing date.
Items affecting comparability: Gains and losses on aircraft and other transactions and restructuring costs
EBITDA: Operating result + depreciation and impairment
Gross capital expenditure: Investments in intangible and tangible assets excluding
advance payments
Liquid funds: Cash and cash equivalents + other financial assets
Interest-bearing liabilities + cross currency interest rate swaps in derivative financial instruments
Interest-bearing net debt:
Interest-bearing liabilities - liquid funds
Equity + interest-bearing liabilities (average of reporting period and comparison period)
Result for the period - hybrid bond expenses net of tax Average number of shares during the period, adjusted for share issues
Shareholders' equity Number of shares at the end of period, adjusted for share issues
Twelve months preceding the reporting date
Shareholders' equity + non-controlling interest Balance sheet total ൈ 100
Interest-bearing net debt Shareholders' equity + non-controlling interest ൈ 100
Interest-bearing net debt + lease payments for aircraft, LTM x 7 Shareholders' equity + non-controlling interest ൈ 100
The figures of the interim report are unaudited.
Return on equity (ROE), %: Result for the period, LTM Shareholders' equity + non-controlling interest (average) ൈ 100
Return on capital employed (ROCE), %: Result before taxes, LTM + financial expenses, LTM Average capital employed ൈ 100
Available seat kilometres (ASK): Total number of seats available × kilometres flown
Revenue passenger kilometres (RPK): Number of revenue passengers × kilometres flown
Passenger load factor, %: Share of revenue passenger kilometres of available seat kilometres
Available tonne kilometres (ATK):
Number of tonnes of capacity for carriage of cargo and mail × kilometres flown
Revenue tonne kilometres (RTK):
Total revenue load consisting of cargo and mail × kilometres flown
Share of revenue tonne kilometres of available tonne kilometres
Unit revenue (RASK) represents the Group's revenue divided by available seat kilometres (ASK).
Unit revenue (RASK) with constant currency aims to provide a comparative, currency neutral measurement for unit revenues. All the currency changes and currency hedging results are excluded from the measurement.
Unit cost (CASK) represents the Group's operational costs divided by available seat kilometres. Other operating income is deducted from operational costs.
Unit cost (CASK) with constant currency aims to provide a comparative, currency neutral measurement for unit costs. All the currency changes and currency hedging results are excluded from the measurement.
Unit revenue per revenue passenger kilometre (yield): Passenger Revenue by product divided by Revenue passenger kilometres (RPK).
Cargo traffic unit revenue per revenue tonne kilometre: Cargo Revenue by product divided by Revenue tonne kilometres (RTK).
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.