Back in Black. Erno Hildén CFO

Transcription

1 Back in Black Erno Hildén CFO 1

2 Improved business performance in Jan Sep M Operational EBIT build-up Jan Sep ,6 11,5 11,1 11,0-1,7-18,1-19,3-21,1 22, , , ,3 38,

3 ...driven by increased traffic and unit revenue improvement Unit revenue per available seat kilometre (RASK) up by 8.7% in Jan-Sep 2012 as both passenger load factor (PLF, +4.5%-p) and yield per revenue passenger kilometre (RPK yield, +2.2%) improved y-o-y Q3 RASK +8.7% PLF +4.5%-p RPK yield +2.2% 3

4 Implementation of 140 million restructuring and cost savings program ahead of target Target 140 million 8% 2% 25% 8% Savings progress to 140 million target TOTAL maintenance 26% 57% 74% 43% 9% staff 43% 57% other 102% 10% lease 105% 24% sales 109% 14% catering 148% maintenance other sales ground handling staff lease catering fuel ground handling 38% 62% fuel 155% 0% 100% 4

5 New 60 million savings programme will ensure reaching our target of 6% operational EBIT margin The aim is to achieve a permanent reduction in costs of 60 million by the end of 2014 The new programme complements the existing 140 million structural change and cost reduction programme launched in 2011 Savings timeline for in total 200 million sustainable savings from 2010 cost level million 50 million 60 million 5

6 Hands-on approach to drive our costs down Dedicated project organisation and well defined responsibilities and timelines for each savings initiative Regular Executive Board level monitoring of advancements All Executive Board members and persons responsible for initiative implementation are incentivised in achieving the targets 9 Program streams and over 200 savings initiatives in total 6

7 Our financial targets Operational profit (EBIT) margin 6% over 120 million in the coming few years EBITDAR margin 17% over 350 million in the coming few years Economic profit To create positive value over pretax WACC of 9.5% Adjusted gearing <140% Dividend policy pay-out ratio minimum one third of the EPS 7

8 The path towards our profitability target Continuous unit cost reduction (ex. fuel) Fixed cost leverage through growth and outsourcing Improved productivity and quality Fleet and network optimisation Operational quality top class Revenue maximization New product offering New destinations Next generation Airbus 350 XWB Capital efficiency and strong balance sheet 8

9 Finnair fleet and future investments 9

10 Strong financial position supports business development and future investments % 120 Strong balance sheet M 750 Good cash position over years despite significant investments / /2012 Equity ratio Net cash flow from operations Gearing Adjusted gearing Investment, gross Short term cash and cash equivalents 10

11 Fleet renewal is key for successful strategy implementation leads to reduced unit costs and improved fuel efficiency First phase in In Long haul, MD11 fleet replaced with Airbus 330/340 Second phase in 2012 Reducing 9 aircraft from European fleet Embraer traffic transferred to Flybe Third phase in Boeing 757 fleet to be replaced with Airbus A321 ERs Harmonized Airbus fleet brings asset and crew utilization benefits Fourth phase from H Airbus 350 XWB, partly to replace current A340s, partly to increase capacity 11

12 Finnair invests in new technology M Gross cash flows totalling 1.2 billion 5 Airbus 321 ER and 11 Airbus 350 XWB aircraft Net effect of investments is materially lower lease expiries for current aircraft

13 We have several funding sources available for aircraft investments secured by aircraft as collateral, loan to values % depending on the vehicle Asset backed loans Export credit In the long-run, owning aircraft is the most costefficient way to finance fleet. (Japanese) operating lease Asset backed bonds Finnair s strategy is >50% ownership of the core fleet 13

14 We can finance investments with our increasing debt capacity Unencumbered 9/2012 Encumbered 9/2012 Unencumbered 12/2013 Encumbered 12/ A-319 A-320 A-321 A-330 A-340 E170 E190 ATR A-319 A-320 A-321 A-330 A-340 E170 E190 ATR-72 Currently 26 unencumbered aircraft = 68% of the total fleet value of 1.05 billion In 15 months 35 unencumbered aircraft 14

15 Our funding strategy is to use different funding sources to ensure the lowest total funding cost with maximum operational flexibility and continuity Fleet investments through secured financing, unsecured loans for refinancing and flexibility Commercial paper programme of 200 million, 61 million outstanding. Revolving credit facility of 200 million expires in Q2/2013. Unutilized, last time of utilisation Only facility with a covenant. Other potential funding sources Non-core fleet sale and leasebacks Asset optimization Pension loan Senior unsecured bond 15

16 We have a balanced loan maturity profile Maturing loans in total 598 million M Guarantee facility (backed by mortgaged 4*A330) to be renewed, the underlying EIB loan expires in / => 16

17 Our actual lease liabilities are lower than reported due to expiring lease agreements Lease commitments, in total 186 million M Aircraft operating lease liabilities Lease liability based on formula (7*annual rentals) 17 Operating leases are off-balance sheet liabilities. When capitalised using the common method of 7*annual aircraft lease payments, the adjusted gearing on 30 Sep 2012 is 90.1%.

18 Finnair has the strongest balance sheet in the Nordics Key ratios as of 30 September 2012 % 200 >400% Equity ratio Gearing Adjusted gearing Finnair SAS Norwegian Norwegian adjusted gearing >400% Pension liabilities excluded from SAS adjusted gearing 18 Finnair Investor Presentation - Nov 2012

19 Summary Profitable Q3 result Cost savings are progressing as planned We have a strong balance sheet Finnair will be the first European airline to fly new A350s in long haul traffic We have a good funding position to finance future investments 19