FY2011 Press Analyst EN 090212 final/media/Files/F/Finnair-IR/... · 2016-11-23 · 9.2.2012 3 Financial performance Turnover, M€ 2,257.7 2,023.3 Turnover growth* +11.7% October–December

9.2.2012

1

FinnairFull year result 2011

9 February 2012Mika Vehviläinen

Content

• Main events of 2011 • Business performance in

Q4 / FY 2011• Transformation and cost saving

programme• Domestic and European traffic

• Outlook

• Appendices

Finnair - Full year result 2011 9 Feb 2012

9.2.2012

2

Main events 2011Market environment Strategy implementation Structural change• Rapid growth of capacity

in the markets in H1

• Natural catastrophe in Japan

• Arabic spring

• Growing uncertainty in global economy in H2

• High price of oil

Aasia• Singapore route launch• Chongqing preparations• Aasian corporate sales growth

nearly 50 %

Partnership strategy• Flybe Nordic, NGA, Swissport

Smooth travel experience• Customer satisfaction,

punctuality and speed of baggage handling among the best network carriers

Significant improvement in cost efficiency: • Unit cost excl. fuel (CASK)

down by 6.1 % in 2011

• Target of 140 M€ annual savings by 2014

• Transformation and cost saving programme on track:

• 10 M€ of realisedsavings during 2011

• To improve cost efficiency Finnair will focus on core business and building a stronger partnership network around its business


Business performancein Q4 / FY 2011

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Financial performance

Turnover, M€2,257.7

2,023.3Turnover growth*+11.7% October–December+11.6% Full Year 2011

Asian passanger traffic revenue* +29.3% October–December+25.7% Full Year 2011

* Change year-on-year


Operating costsOperating costs, M€+15.8% October–December+13.9% Full year 2011

Fuel cost, M€ **+37.3% October–December+28.6% Full year 2011

105,3 132,8

103,1131,7

116,7

144,3106,6

146,4

0

100

200

300

400

500

600

2010 2011

Q1 Q2 Q3 Q4

** Incl. hedging

511,1 580,8

495,8 557,2

513,9584,2

529,9613,4

0

500

1 000

1 500

2 000

2 500

2010 2011

Q1 Q2 Q3 Q4

* Change year-on-year

2,335.6

2,050.7555.2

431.7


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Cost structure

19 %

24 %

3 %5 %5 %9 %

8 %

6 %

4 %

7 %

10 %

Q4 2011

19 %

24 %

3 %5 %5 %9 %

8 %

6 %

4 %6 %

11 %

2011


Finnair traffic in 2011

• Available Seat Kilometers (ASK) grew mainly as a result of growth in Asian traffic• Revenue Passenger Kilometers (RPK) grew• Passenger Load Factor (PLF) fell• Passenger and cargo revenues increased

Q4 /11 vs Q4/10* 2011 vs.2010ASK 20.5% 16.8%- Asian share of ASK:s 48.0% 49.0%RPK 16.9% 11.8%PLF% -2.2%-p -3.2%-pPassenger revenues 18.3% 13.9%

* Cabin crew strike in December 2010.


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Traffic structure 2011

49 %

29 %

5 %

5 %

12 %

ASK

Asia Europe DomesticNorth America Leisure

50 %

35 %

8 %5 % 2 %

Passenger revenues

Asia Europe DomesticNorth America Leisure


Transformation and cost saving programme

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The Future FinnairCost competitiveness

140 M€ permanent reduction in cost level

Service excellenceFinnair designed for you

Partnership strategyPartner network and

alliances

Profitable growthStrengthening Asian

presence, business travel and tailored ancillary

services

Focus on core businessStructural solutions and

ongoing business improvement

Number 1 in the Nordic countries

Among the top three in Asian traffic

Doubling of Asian turnoverby 2020


Targeting 80 M€ savings by end of 2012

Administration, marketing and

salesMaintenanceSupport Services Fleet and network Productivity of

flying personnel

10M€ 70 M€

2011 2012

60 M€

2013

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Finnair transformation progresses

Streamline administration, purchasing, sales and distribution

Personnel negotiations completed, headcount to be reduced by 150.

Cost savings in engine and component maintenance

Structural solutions and partnership alternatives under evaluation

In-flight services and support services Apron services to Swissport

Optimising fleet size and route networkFleet reduction of 9 aircraft during 2012; new cabin design for A32S fleet; unprofitable routes discontinued

Improving productivity of flying personnel

Significant improvements in productivity in CLAs, work continues to reach further improvements

Administration, Marketing and sales

Maintenance

Support Services

Fleet and network

Personnel productivity

Categories Objectives Status


Network optimisation enabled reduction in fleet size

Leases of 4 Airbus A320 Seriesaircraft discontinued in 2012

4 Embraer 170 aircraft sub-leased to Estonian Air


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We have two targets

1. Growth in Asia and in the Nordiccountries

2. Improve competitiveness of our European traffic


Finnair targets to strengthen its position in the Nordic countries


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Market size and players –heavy competition in the Nordic countries


Cost competitive ownnarrow-body traffic

JV operates a part of Finnairs current narrow-body traffic

JV operates Finnair entirenarrow-body traffic

We are assessing the possibilities to transfer a partor all our narrow-body fleet to the future JV

1 2 3

JV = joint venture

Alternatives:

JV to expand our footprint in Nordic Countries

Target is to return European traffic to black and form a costcompetitive JV


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JOINT VENTURE

=

=

=

In the future we have three distinct products, each with their own purpose

*

* Finnair owns 40% of Flybe Nordic.


NEGOTIATIONS WITH PERSONNEL

NEGOTIATIONS WITH PARTNERS

IMPLEMENTATIONPLANNING

FINNAIR OPERATIONS

JV OPERATIONS

CURRENT FLYBE OPERATION CONTINUES

Timeline


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Other actions in narrow-body traffic

• We optimise the size and utilisation of our narrow-body fleet

• A32S fleet’s capacity increased with new cabin versions

• New competitive pricing for domestic and Scandinavian routes


Outlook

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Asia drives growth

• Increasing presence in high growth markets: POS shifting more towards Asia– Huge market potential: 2.8 billion people*, average GDP per capita $8,269* in Finnair’s

destination countries in Asia.– Finnair’s focus on business and corporate travel.– Asian traffic to be doubled by 2020.– Chongqing route to be opened in 2012.– In 2011, Asia accounted for 50% of Finnair’s passenger revenue.

• Heavy competition in European markets– Overcapacity with several players struggling.

*The World Factbook 2009. Washington, DC: Central Intelligence Agency, 2009.


Outlook for 2012

• Operational result in the first half of 2012 is estimated to be clearly loss-making.

• Passenger traffic capacity in its current structure and form is estimated to grow by around 5% in 2012.

• Fuel costs are estimated to be significantly higher in 2012 compared to the previous year.

• Costs reductions of 80 M€ out of the total of 140 M€ are estimated to be achieved by the end of 2012.


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2011 figures

Key figuresOct-Dec

2011Oct-Dec

2010 Change % Jan-Dec2011

Jan-Dec2010 Change %

Turnover and result

Turnover € million 577,4 516,9 11,7 2 257,7 2 023,3 11,6

Operational result, EBIT € million -31,6 -6,7 - -60,9 -4,7 -

Operational result, % turnover % -5,5 -1,3 -2,7 -0,2

Operating result, EBIT € million -30,1 -4,7 - -87,8 -13,3 -

EBITDAR € million 26,4 38,0 -30,5 139,6 176,6 -21,0

Result before taxes € million -38,2 -9,6 - -111,5 -33,0 -

Net result € million -32,6 -5,7 - -87,5 -22,8 -

Balance sheet and cash flow

Equity ratio % 32,6 36,2 -3,6 %-p

Gearing % 43,3 27,8 15,5 %-p

Adjusted gearing % 108,4 79,6 28,8 %-p

Capital expenditure, CAPEX € million 21,1 27,1 -22,1 203,9 183,5 11,1

Return on capital employed, ROCE 12 months rolling % - -5,2 -0,4 -4,8 %-p

Return on equity, ROE , 12 months rolling % - -10,9 -2,7 -8,2 %-p

Net cash flow from operating activities € million 8,5 16,4 -48,2 50,8 76,0 -33,2

Share

Share price at end of quarter € 2,30 5,04 -54,4 2,30 5,04 -54,4

Earnings per share € -0,27 -0,06 - -0,75 -0,24 -


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Operational EBIT build-up in Q4 2011(IFRS)


Operational EBIT build-up in 2011 (IFRS)

-39,9

-50,5


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Change in operating expenses in Q4 2011 vs. Q4 2010

4,5 %

29,8 %

0,3 %

21,8 %

24,1 %

3,3 %

37,3 %

10,3 %

15,8 %

0% 10% 20% 30% 40%

Other expenses

Depreciation and lease payment for aircraft

Expenses for tour operations

Ground handling and catering expenses

Traffic charges

Staff costs

Fuel

Operating expenses excl. Fuel

Total operating expenses


Change in operating expenses in 2011 vs. 2010

9,6 %

10,6 %

9,3 %

13,2 %

12,3 %

3,8 %

28,6 %

10,0 %

13,9 %

0% 10% 20% 30% 40%

Other expenses

Depreciation and lease payment for aircraft

Expenses for tour operations

Ground handling and catering expenses

Traffic charges

Staff costs

Fuel

Operating expenses excl. Fuel

Total operating expenses


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Airline Business:RASK and CASK in 2011 vs. 2010

% change FY 2011 vs FY 2011Finnair - Full year result 2011 9 Feb 2012

Airline Business: RASK and CASK in Q4 2011 vs. Q4 2010

% change Q4 2011 vs. Q4 2011Finnair - Full year result 2011 9 Feb 2012

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Jet fuel spot price development


Change in fuel costs FY 2011 vs. FY 2010

Incl. hedging loss of

-24 mEUR

Incl. hedging profit of

77 mEUR

176

555

432

-101

-25

73

0

100

200

300

400

500

600

700

2011 Volume Price Currency HedgingDeviation

2012

mEUR


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18

Change in fuel costs Q4-11 vs. Q4-10

Incl. hedging loss of

-3 mEUR

Incl. Hedging profit of

19 mEUR

147

107

39-22

1

22

0

50

100

150

200

Q4/2010 Volume Price Currency HedgingDeviation

Q4/2011

MEUR


Hedge positions as of 31.12.2011

0%

20%

40%

60%

80%

100%hedge ratioupperlower


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19

Traffic Region Development 2011 vs. 2010 (note: Cabin att. strike Q410)

• Asia traffic share 49 % of total ASK

ASK 28,8 % ASK 14,6 % ASK 27,8 %

RPK 29,5 % RPK 16,2 % RPK 17,6 %

PLF% 0,4 %-p PLF% 0,9 %-p PLF% -6,5 %-p

Traffic revenue * 20,0 % Traffic revenue * 11,1 % Traffic revenue * 25,7 %

ASK -13,8 % ASK 20,5 % ASK 16,8 %

RPK -14,5 % RPK 15,2 % RPK 11,8 %

PLF% -0,7 %-p PLF% -2,5 %-p PLF% -3,2 %-p

Traffic revenue * -13,2 % Traffic revenue * 10,4 % Traffic revenue * 13,9 %

ATK 87,8 %

RTK 78,6 %

CLF% -3,4 %-p

* passenger revenue Traffic revenue 74,6 %

Cargo

Europe North Atlantic

Leisure traffic Domestic

Asia

Total


Traffic Region Development Q4 2011 vs. Q4 2010 (note: Cabin att. strike Q410)

• Asia traffic share 48 % of total ASK

ASK 30,5 % ASK 15,4 % ASK 34,6 %

RPK 25,7 % RPK 25,4 % RPK 22,6 %

PLF% -2,9 %-p PLF% 5,3 %-p PLF% -7,1 %-p

Traffic revenue * 21,3 % Traffic revenue * 19,3 % Traffic revenue * 29,3 %

ASK -3,4 % ASK 7,5 % ASK 20,5 %

RPK -8,2 % RPK 16,9 % RPK 16,9 %

PLF% -4,2 %-p PLF% 4,5 %-p PLF% -2,2 %-p

Traffic revenue * -4,3 % Traffic revenue * 2,9 % Traffic revenue * 18,3 %

ATK 21,1 %

RTK 21,7 %

CLF% 0,3 %-p

* passenger revenue Traffic revenue 21,2 %

Cargo

Europe North Atlantic

Leisure traffic Domestic

Asia

Total


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Thank you!

FY2011 Press Analyst EN 090212 final/media/Files/F/Finnair-IR/... · 2016-11-23 · 9.2.2012 3 Financial performance Turnover, M€ 2,257.7 2,023.3 Turnover growth* +11.7% October–December

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