Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Passenger numbers increased by 5%, with 3 million passengers carried in Q2 2024.
- Available seat kilometers increased by 6%, indicating expanded capacity.
- Cargo business revenue grew by 9%, contributing significantly to overall revenue.
- Ancillary revenues increased by 34% year-over-year, showing successful commercial strategy.
- Strong cash flow generation with EUR173 million in operative cash flow, improving the balance sheet.
Negative Points
- Unit revenues and yields declined by 4%, leading to decreased profitability.
- On-time performance was below target due to runway renovations and challenging weather conditions.
- Passenger load factors decreased in European and domestic traffic despite increased capacity.
- Maintenance costs were higher than expected, partly due to runway closure and weather conditions.
- Yield environment is softening, with normalization leading to lower yields compared to the previous year.
Q & A Highlights
Q: Ticket liabilities were up 8% year over year. How much of this relates to normalizing booking curves versus growing demand for Q3?
A: We are seeing a normalization of the booking curve and increased demand for the added capacity. It's a bit of both, and we'll see how it pans out for the rest of the year. (Kristian Pullola, CFO)
Q: Can you comment on the current booking situation and the balance between load factors and yields for Q3 or the second half?
A: We have seen normalization in demand and capacity, leading to yields coming down from elevated levels. The onflowen ticket liability is up, indicating continued healthy sales. We need to focus on maintaining competitiveness and driving costs down. (Kristian Pullola, CFO)
Q: Was the yield outcome for the quarter in line with your expectations, or was it a disappointment?
A: The yield environment has normalized from elevated levels, which was expected. The 4% year-over-year decrease is not dramatic and aligns with our expectations. (Kristian Pullola, CFO; Turkka Kuusisto, CEO)
Q: Can you remind us what share of the 10% capacity increase for the full year is leased out?
A: Roughly half of the growth comes from the new wet lease agreement with Qantas. The rest is from growing our own flying capacity. (Kristian Pullola, CFO)
Q: Any comments on capacity plans for 2025? Will you need new aircraft capacity?
A: We are adjusting capacity based on demand and do not plan to grow capacity through new investments. We are utilizing our existing fleet more efficiently. (Turkka Kuusisto, CEO; Kristian Pullola, CFO)
Q: Were there any surprising items in maintenance costs during Q2, and should we expect similar increases in coming quarters?
A: Q2 had some pressure on maintenance costs due to discount rate changes and engine-related maintenance. This cost line is volatile, but we are working to structurally lower maintenance costs. (Kristian Pullola, CFO)
Q: Any further information on the global IT issues impacting air traffic and how it will affect your operations?
A: Finnair does not use the affected technology stack in our flight operations. However, we are monitoring the situation and may delay or terminate some flights if necessary. (Turkka Kuusisto, CEO)
Q: How do current yields compare to 2019 levels, and can you provide a regional breakdown?
A: Yields are still higher than in 2019, but so are costs. North America has been strong, while Asia and Europe have been weaker. (Kristian Pullola, CFO)
Q: Why is there such a large range in your EBIT guidance?
A: The range accounts for multiple factors like volume, yield, and fuel price. It reflects best and worst-case scenarios, not an expected value. (Kristian Pullola, CFO)
Q: Can you comment on the strong ancillary revenues despite softness in unit yields and load factors?
A: We have been pushing for additional ancillary sales, which developed positively. Structuring our product to offer customer choices and training our organization to sell has shown results. (Turkka Kuusisto, CEO; Kristian Pullola, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
