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Finnair - EBIT below expectations

Finnair’ Q1 adj. EBIT was clearly below what we expected at EUR -16.2 vs. our expectation of EUR -6m. Consensus was at -6m. Finnair 2019E guidance reiterated; 10% capacity growth and revenue growth somewhat behind capacity. Especially transfer traffic between Asia and Europe grew well as well as cargo. Finnair expects the competition to increase especially between Europe and Asia and in Asian traffic as the capacity increases. Finnair’s figures were largely impacted by IFRS 16 changes.
  • Q1 revenue was EUR 673m vs. EUR 679m/680m Evli/cons.
  • ASK grew by 10.4 % whereas RASK decreased 4.9 % in Q1.
  • Q1 adj. EBIT was EUR -16m vs. EUR -6m/-6m Evli/cons. The difference is caused by increased expenses and higher price of fuel compared to the previous year.
  • Q1 comparable EBITDA was 60m vs. 75m our view. Pre-tax profit was -49m vs. -31m our view. The difference comes partly from financial expenses that were EUR 31.6m vs. EUR 25m our view.
  • Absolute costs: Fuel costs were EUR 145m vs EUR 155m our view. Staff costs were EUR 130 vs. 128m our view. All other OPEX combined were EUR 429m vs. 339m our view.
  • Unit costs: CASK was 6.46 eurocents vs. 6.42 our view while CASK ex fuel was 5.02 eurocents vs. 4.97 our view.

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