Finnair Achieves Profitability in Q2 2023 Amidst Ongoing Challenges from the Russo-Ukrainian Conflict
Finnair, the Finnish flag carrier, successfully maintained profitability during the first six months of 2023, effectively navigating the challenges presented by Russia’s ongoing war against Ukraine. Despite previous losses caused by the pandemic and airspace closures, the airline’s CEO, Toppi Manner, described Q2 2023 as a “strong” quarter, marking the third consecutive profitable period.
Financial Performance: Finnair reported positive results for H1 2023, with a total of €141.6 million ($157.5 million) in profits. Notably, Q2 2023 alone contributed €138.6 million ($154.1 million) to the overall profit. This marked a significant improvement compared to H1 2022, during which the airline incurred losses amounting to €381.4 million ($424.2 million).
Factors Driving Profitability: Manner attributed the recent success to robust demand combined with capacity and resource constraints in the aviation sector due to the lingering effects of the pandemic. These conditions positively influenced the airline’s unit revenues, contributing to the company’s overall financial improvement.
Guidance and Outlook: In its recent guidance, Finnair projected its Available Seat Kilometers (ASK), a measure of capacity, to reach between 80% and 85% of 2019 levels. However, the airline anticipates revenue levels to remain below those seen four years ago by the end of 2023. Nevertheless, Finnair estimated a full-year profit ranging from €150 to €210 million ($166.8 to $233.6 million), signifying an encouraging improvement over previous guidance.
Risk Factors and Uncertainty: Despite positive trends, Finnair acknowledged certain risk factors that could impact its operations. While factors such as the ending of COVID-19 lockdowns and the reopening of Russian airspace have normalized, risks related to inflation and rising interest rates on demand and costs remain elevated, creating uncertainty in the operating environment.
Future Updates: The airline plans to provide further insights into its outlook during the publication of its Q3 2023 results, scheduled for October 31, 2023.
Fleet Changes: As part of its ongoing operational adjustments, Finnair has retired a single Airbus A319 from its fleet since December 31, 2022. Currently, the airline still has a pair of Airbus A350-900s on order.
Conclusion: Despite the challenging geopolitical and economic circumstances, Finnair’s resilient performance during Q2 2023 marks a significant milestone in its journey toward sustained profitability. As the aviation industry continues to adapt to the evolving landscape, Finnair remains committed to providing updates on its outlook and business operations to stakeholders and customers alike.