Finnair has increased its profit outlook for the full-year 2023 – the carrier cited strong travel demand, favourable fuel pricing and the success of its strategic adjustments following the closure of Russian airspace.

Finnair to match or exceed 2019 profit

Following a better-than-anticipated start to the year, the Finnish carrier now believes its full-year operating profit for 2023 will reach or possibly exceed its 2019 total of €162.8 million ($175.7 million). The airline’s previous estimate, published in late April, projected a significant increase in revenue and profit year-on-year, but figures still fell short of 2019.

The airline said,

“Finnair raises its guidance for comparable operating result for the full year 2023, as it expects the travel demand to continue stronger than previously anticipated, fuel price development has been more favorable than expected and as the company’s strategy implementation has progressed better than anticipated.”

Following the updated guidance, Finnair will reach its operating profit margin target of at least 5% 12–18 months earlier than expected. Despite its improved profit outlook, the airline does not expect to reach its pre-pandemic revenue (€3.09 billion) this year.

Strategy change pays off

Finnair was significantly impacted by the outbreak of hostilities in Ukraine in early 2022, which hit just as it was getting back on track following the pandemic. With Russian airspace closed off indefinitely, the airline’s lucrative long-haul routes suddenly became a lot more expensive to operate. Finnair’s geographical location was always a big draw for passengers flying to Asia but forced routing changes added hours onto flights and increased fuel costs.

To overcome Russian airspace challenges, Finnair made several important adjustments to its long-haul strategy. The airline has focused on forming partnerships with airlines – including wet leasing agreements with Qantas and British Airways – and bolstering its presence in the US and the Middle East to avoid the uneconomical routing that impacted its Asian network. It has also embarked on widespread cost-cutting measures, including trimming its fleet, that have further helped it navigate through a difficult period.

However, the airline warns that uncertainty remains, particularly the ongoing Russia-Ukraine conflict and other headwinds, such as rising interest rates, high fuel costs and inflation. With Russian airspace likely to remain closed for the foreseeable future, the airline’s “fleet optimization” and a more geographically balanced network will continue to pay dividends

Full report coming next month

Finnair will publish the full details of its updated guidance in its half-year report, due to be released on July 21st. The airline has seen passenger levels essentially return on par with pre-pandemic times – in May, the carrier served 960,400 passengers, a 22% increase year-on-year, with an on-time performance of 86.5%.

Source: simpleflying.com