Finnair Reports First Quarter Loss of €91.1 Million on Revenues of €561 Million
Finnair reported on Wednesday a first quarter loss of €91.1 million or (€1.14) per share on a 16 percent decline in revenue to €561.2 million. Revenue per available seat kilometer (RASK) declined 7.3 percent, while cost per available seat kilometer (CASK) rose 5.1 percent.
Last Wednesday (April 29, 2020), Finnair reported a first quarter loss of €91.1 million or (€1.14) per share on a revenue decline of 16 percent to €561.2 million. Unit revenue (RASK) decreased 7.3 percent, while unit cost (CASK) increased 5.1 percent. Cost per available seat kilometer excluding fuel (CASK-ex) increased 4.0 percent. Fuel costs for the quarter decreased 0.9 percent year-over-year to €1.9 million. Net expenses for the quarter increased substantially with €55 million attributable to jet fuel and foreign exchange hedging. Net cash flow from operations was negative (€133.5) million and net cash flow from investments was negative (€67.3) million. During the quarter, the number of passengers decreased 15.6 percent to 2.7 million, while available seat kilometers (ASK) decreased by 9.4 percent. Passenger load factor (PLF) decreased 5.7 percent to 71.6 percent. In Tuesday’s report, Finnair’s CEO, Topi Manner said in part,
“We issued profit warnings on 28 February and 16 March, and at the same time, we announced measures we took to reduce our costs. We have made good progress in achieving these savings. These measures, which are necessary in this situation, include temporary layoffs for all Finnair employees. Other measures include a strong adjustment of our network as well as cuts in sales and marketing costs, supplier agreements, IT costs and investments. At the same time, management salaries will be cut 15% and the Board will waive its remuneration in the same proportion. T hanks to our strict cost adjustment efforts, we started the second quarter with a cost level that is approximately 70% less than the monthly level prior to the coronavirus period. Excluding depreciation, costs have decreased 80%. The impact of the adjustment measures will be more clearly reflected in costs during the second quarter when we will operate a minimum network corresponding to approximately 5% of our capacity.”
Finnair expects a daily cash burn rate of approximately €2 million/day during the second quarter. The carrier ended the first quarter with liquidity of €833 million, including a raised €175 million revolving credit facility. Finnair has also drawn up a long-term liquidity plan which includes a €600 million pension premium loan to be drawn upon if necessary as well as aircraft sale and leaseback arrangements. Should the COVID-19 situation continue, Finnair’s cash position has been secured beyond the first half of 2021. Additionally, the company withdrew their 2019 share dividend and plans on issuing approximately €500 million in shares to fortify their equity. Finnair does not expect passenger numbers to return to the pre-pandemic levels for two to three years.