‘Tis the season of airline financial results, and today Finnair joined in by revealing that its revenues continue to be severely impacted by the COVID-19 pandemic. The airline has drastically reduced its capacity. However, even the flights that it is operating are suffering from reduced passenger numbers.
This year, quarterly results from airlines around the world have all been relatively grim. Most airlines have had to cut their schedule and ground aircraft. Grounded aircraft aren’t flying passengers around the globe. This means that they aren’t making money for the airlines. In turn, while expenditure on fixed costs continues, far less money is entering the company.
A grim three months
As far as Finnair is concerned, compared to its 2019 figures, quarter three was fairly grim. The airline saw its revenues decrease by 88.7% year on year from €865.4 million ($1.016 billion) last year to €97.4 million ($114 million) this year.
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The drop in revenue was accompanied by a fall in passengers flown. After all, carrying passengers is a moneymaker for airlines. In the third quarter of 2019, the Finnish flag carrier moved 4.1 million passengers. By comparison, this year, it managed just half a million passengers.
Rather than emptying tonnes of empty flights, the airline did significantly cut its schedule. This meant that the number of seats available to passengers took a tumble by 86.8%. Despite this, aircraft were still more empty than the preceding year.
In 2019, roughly 82% of seats on each flight were occupied. Meanwhile, this year that figure fell to just 38.7%. Of course, the low figures have also impacted the airline’s financials from January to date. This is, unfortunately, likely to continue in the coming months. The airline recently announced 10% of its jobs would be cuts as a result of the situation.
Commenting on the results, the airline’s CEO Topi Manner said,
“During the review period, we continued to take action to strengthen our financial position and equity. We refinanced our previous hybrid bond of 200 million euros, conducted a sale-and-leaseback arrangement for one of our A350 aircraft, and drew a second 200-million-euro tranche of our 600-million-euro pension premium loan. Thanks to these measures, our cash position remains strong and our balance sheet is healthy.”
Looking to the future
It seems as though the situation isn’t likely to improve drastically before the end of the year. Most airlines are aiming to recapture 2019 traffic levels in 2023-24. While some European airlines had an excellent end to the summer, all things considered, the second wave of COVID-19 spreading across Europe has led to restrictions being reimplemented.
As such, Finnair’s new guidance for the fourth quarter of the year suggests that the operating loss in Q4 will be similar to that experienced in the second and third quarters. The airline believes that its revenue and capacity will decrease by over 70% for 2020 compared to 2019.
What do you make of Finnair’s Q3 results? Let us know what you think and why in the comments!