Q3 2026 Finnair Oyj Pre - Silent Earnings Call
Speaker #1: Good afternoon, everybody, and welcome to Finnair's Q3 pre-silent call. My name is Officially, and I'm new here at Finnair. I started on September 1 as IR Director, and I'm really looking forward to continuing Erkka's and Emilia's good work.
Speaker #1: Today, Pia, our CFO, is here to talk a little bit about what has been happening—giving you a slide update, but without any further talk from me.
Speaker #1: Pia, I hand over to you.
Speaker #2: Thank you, Sofie. And good afternoon, or good morning, depending on where you are, ladies and gentlemen. Let me start with a few remarks. I'll talk briefly about the market, obviously about the fuel situation and hedging, a couple of words about our fleet, and that probably rounds up my commentary.
Speaker #2: That will be rather brief, and after that we will open up for questions and answers. So first, on the market situation—what we've seen in July and August, and you've also probably seen our traffic performance releases—really, it has continued to show positive momentum.
Speaker #2: Our passenger volumes increased by 9.3% in July and by 2.3% in August, year on year. Let's remember that last year there were still some extraordinary conditions—maybe most importantly, we still had industrial actions during parts of July, in 2025.
Speaker #2: Anyway, if you would ask me sort of what the market momentum is right now—can I use that word?—I would really say that the market is still showing resilience, despite this world that we are living in, despite everything that's going on.
Speaker #2: We still see growth year on year; we still see a resilient situation. Obviously, the Middle East merits a few comments, as you recall. Our direct exposure is very limited—it's a low single-digit share of our capacity and passenger traffic that we used to have there. Right now, obviously, we are not flying to the Middle East area, but the situation still continues to impact the whole market.
Speaker #2: I mean, it impacts the industry through safety, through capacity, through passenger flows, and obviously as well through fuel markets. So, holistically, the impact is big, but the direct exposure in terms of flights is limited. You will now see that direct exposure come through in that there's no flying to the Middle East.
Speaker #2: A little bit about load factors. Our load factor was high, 85% in July, and it really in July it improved in all traffic areas, operated by us.
Speaker #2: In August, the passenger load factor remained high—it was 80.3%—and it improved in the European and North American traffic. The unit revenue development has remained clearly positive, and I'm going to quote to you just the improvements, or sort of the delta. In July, RASC increased by 8.9%, and in August, RASC increased by 12.3%.
Speaker #2: And what's supporting this? It's, of course, good load factors, but it's also higher yields. In the background, we have continued the good work of optimizing our network, capacity allocation, and pricing to capture demand. Obviously, there's a lot of differences or market flows out of the Middle East, and we have seen some flow still into our Asian traffic here.
Speaker #2: So overall, a resilient market situation has continued. I also want to give a bit of credit and a shout-out to Cargo. I think their performance has been really strong, and it has supported Finnair's performance as well.
Speaker #2: Also, as well through the Q3. Then let's talk a little bit about fuel. It remains a really important point, especially in terms of cost escalation.
Speaker #2: But most importantly, from Finnair's perspective, we have not canceled flights because of fuel. So with this I mean fuels shortage, and I mean that when we first discussed the war in Iran and the situation, early in the spring of course there were then some fears of fuel shortages across the industry.
Speaker #2: And indeed, the jet fuel market has remained constrained, and this has impacted the prices, which stay at a very elevated level. But the jet fuel supply across Finnair's network is expected to still remain stable in Q4, as it is supported by the continued close cooperation with our fuel suppliers.
Speaker #2: And a few more detailed comments about the market view, specifically where we see it right now on fuel. Supply in Southeast Asia and the United States remains relatively good.
Speaker #2: Europe is more constrained but still stable. Europe is partly supplied by overseas products from the US, Africa, and Southeast Asia. Holistically, winter typically reduces jet fuel demand, which should support overall availability.
Speaker #2: And as before, we continue to monitor the market very closely, and we also work with our suppliers to secure reliable fuel availability for Finnair's operations.
Speaker #2: Then let's discuss hedging a bit. At the end of the second quarter, Finnair had hedged 81% of its fuel consumption for Q3, 71% of its fuel consumption for Q4, and then, looking into next year, 58% for the fuel consumption in the first quarter of 2027. I'll still quote the second quarter of 2027—that's 40%.
Speaker #2: So you can see that there was, let's say, a window during the summer when we actually saw lower prices, and that was a good moment to increase some of the hedging.
Speaker #2: However, holistically, if we look at the market throughout Q3, the fuel market prices have been rising and have been very elevated, and the opportunities to do hedging have not been that many.
Speaker #2: So I think here, just as a reminder of Finnair's fuel hedging policy, we have a spread or a corridor within which we can move.
Speaker #2: With our hedging—and clearly, as you can see—those hedging ratios into next year are a bit lower now than what we have seen all through 2026.
Speaker #2: But we will keep you posted, and in the next report we will again quote the most recent hedging levels. When we are looking ahead, the market conditions are currently looking very volatile. There’s no immediate easing in sight, given the continued hostilities in the Middle East and the lack of visibility on clear diplomatic offerings to de-escalate the current conflict.
Speaker #2: We are constantly following the developments in the Middle East, and then we will plan—we are planning to act accordingly. So obviously, staying extremely, sort of, on top of any opportunities for hedging also going forward.
Speaker #2: I would like to round up my comments very briefly, relating to our fleet. The development of our fleet has been a significant part of our strategy, and you are well aware of the longer-term commitments that we have made.
Speaker #2: I just want to say things are moving according to plan. However, in the third quarter, there was no new capacity added to our commercial fleet, but we have some additions coming in.
Speaker #2: The one I, of course, want to mention is the A350, the Airbus A350, that we are still sort of getting towards the end of the year, even though commercial flying will start next year.
Speaker #2: So we continue on the set strategic path when it comes to our fleet. And with that, Sophie, I would like to end my comments.
Speaker #1: Thank you, Pia. I think we can jump to questions, so please, operator, if you can help us with that.
Speaker #3: If you wish to ask a question, please dial #Key5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #Key6 on your telephone keypad.
Speaker #3: The next question comes from Yako Tyervinen from SEB. Please go ahead.
Speaker #4: Yes, good afternoon. It's Yako from SEB. Thanks for the presentation. I would like to ask about the situation with Air Baltic and their Chapter 11 process.
Speaker #4: Have you seen Air Baltic cutting their Finnish routes yet, or is there any such activity visible?
Speaker #2: Hi Yako, thanks for the question, and indeed, I mean from at least the headlines that we all can follow. Of course, they are now entering into this Chapter 11, and you know I couldn't comment yet on such competitor movements, but obviously, you know, what we have been reading in their statements is that they are cutting down their fleet, etc.
Speaker #2: So definitely something to follow.
Speaker #4: Okay, good, thanks. Then, on the kind of market activity, what happens with hiking ticket prices? I've noticed that some of your low-cost carrier peers and competitors have not been hiking their prices, based on their monthly reports.
Speaker #4: Are you seeing the market being rational when it comes to the need to pay a higher fuel cost in ticket prices?
Speaker #2: I could only refer to some broader statistics, Yako, so you know, when it comes to individual companies, that would be a bit difficult to comment on. But I think if we sort of follow broader statistics also on European level, I think it is still visible that the higher fuel prices have also resulted in higher ticket prices from where we can follow it. And where we can follow it is historic data.
Speaker #2: So I think this is still up to where there's actual data on the situation.
Speaker #4: Okay thanks. Then on a bit kind of a demand side of things are you seeing the and perhaps looking to what 27. Are you seeing the underlying kind of a demand in the markets being enough?
Speaker #4: Is there enough demand, or is the demand strong enough in order to hike the prices in the magnitude you need to offset the rising fuel bill?
Speaker #2: Yako, you are asking a sort of a complex question, because, as you know, the market price is set so often.
Speaker #2: I cannot even say daily—it's like minute by minute. You know, it's supply and demand, and it continues to be set by the market.
Speaker #2: But I can comment on some of the kind of broader dynamics behind that. I think when I used the word "resilient" for the market, I still want to say I think that's a very positive word.
Speaker #2: Sort of given where the world is right now and the thing that I'm obviously you know that we are really following is as well you know with higher interest rates you know with maybe more inflation you know how will the consumer feel this in their wallet and what will this mean for demand.
Speaker #2: And I think, you know, if we talk about this demand side, we have still seen it remain robust. So people are still planning to travel, you know, still booking flight tickets, and so the demand side of the equation still seems to hold up at this point in time.
Speaker #2: And then we can of course debate kind of what the supply side is and you know is there anyone who would sort of not be feeling the consequences of these higher you know fuel costs.
Speaker #2: And I think at least from a hedging position, Finnair has, you know, we are very well positioned. I think we have a strong hedging position—as strong as you may, you know, kind of possibly imagine to have right now.
Speaker #2: This, of course, is something that can change day by day, but from where we stand today, I think we are—you know—it seems that the market is still resilient.
Speaker #4: That is helpful. Thanks for the color, Pia. All from my side.
Speaker #2: Thanks Yako.
Speaker #3: As a reminder, if you wish to ask a question, please dial #Key5 on your telephone keypad. There are no more questions at this time.
Speaker #3: So, I hand the conference back to the speakers for any closing comments.
Speaker #1: Well, if we don't have any more questions at this time, then I thank you and everybody online. I hope to see you on the 27th of October when we publish our Q3 results.
Speaker #1: Thank you very much and in due time if there are anything or if you need to contact please contact me at sofie.jolly@finner.com. Thank you very much.
