Finnair sees air travel ‘uncertainty’ continuing in 2023

Finnair, while improving its annual financial results, warns of continuing uncertainty
Danil Tsoy /

While Finnair’s revenue grew exponentially throughout 2022, a large operating loss and “uncertainty” will continue to prevail in the short-term future for the Helsinki-based airline. 

In total, the carrier earned €2.3 billion ($2.4 billion) of revenue, an improvement of 181.1% compared to 2021. However, the airline noted that “high fuel prices had an adverse cost of impact” of around €375 million ($401.3 million) Year-on-Year (YoY) and, as such, the final operating result was a net loss of €200.6 million ($214.6 million).

Finnair carried 9.1 million passengers throughout 2022, with an average load factor of 67.6%, an improvement compared to 42.8% in 2021.

The Helsinki Airport (HEL)-based carrier estimated that in 2023, it would offer an average capacity of between 80% and 85%, measured in Available Seat Kilometers (ASK), compared to 2019. Furthermore, Finnair said that it “estimates that the strong demand for travel will continue in the short-term, supporting its unit revenues as in the second half of 2022, but the continuing general economic uncertainty will weaken the visibility of travel demand development during 2023”.

Still, as China opened its borders to international travel in January 2023, the Finnish carrier expected that seasonality would return. That means that Q1 would return to its normal cyclical nature and be weaker, “while the summer months are the high season in travel”, the carrier added.

Uncertainty continues 

Nevertheless, several external factors are expected to continue having a negative impact on Finnair’s operations. 

“Significant uncertainty in Finnair’s operating environment continues, as the price of fuel is high and the length of the Russian airspace closure and the impact of inflation on demand and costs are unclear,” the Finnish carrier continued in the outlook, predicting that its revenue would “significantly increase year-on-year”. 

Finnair will continue providing guidance throughout the year, including during its Q1 2023 results presentation, which is currently scheduled for April 27, 2023. 

“Although the challenges of our operating environment continued in the form of high fuel prices, accelerating inflation, the remaining effects of the pandemic, as well as the Ukrainian war and closed Russian airspace, there were also positive developments,” Topi Manner, the Chief Executive Officer (CEO) of Finnair, said. 

Manner highlighted the opening of Japanese and Chinese borders as one of the positive developments, which means that the effects of the COVID-19 pandemic are expected to no longer impact the airline. The partnership with Qatar Airways, whereupon the Finnish airline began codesharing with the Qatari carrier on flights from/to Copenhagen, Denmark, and Stockholm, Sweden, as well as Helsinki, Finland, “will significantly increase the importance of the Middle East in our network, and it will also enable smooth transfers to numerous destinations in e.g., Africa and Asia,” Manner noted.

Profitability, namely positive Earnings Before Interest and Taxes (EBIT) of at least 5%, still remains a target from mid 2024. “Considering on one hand the market developing more positively than previously anticipated, and on the other hand the continued strong cost inflation, we expect the strengthening of unit revenues to play a bigger role than we previously expected in achieving our targets,” Manner commented.

But “people want to travel,” the CEO continued, noting that this was “despite the economic uncertainty and weak consumer confidence”. He added that strong demand was expected to continue.

“Finnair turns 100 years old this year. During this milestone year, our eyes are firmly on the future, and the work to restore Finnair’s profitability continues,” Manner concluded.  

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