Finnair Group (Helsinki) reported a net loss of €9.8 million ($11.0 million) for the first quarter, down from a net loss of €28.1 million $35.5 million) in the same quarter a year ago.

CEO Pekka Vauramo commented on the results:

Finnair’s revenue in the first quarter of 2015 was on a par with the corresponding period in 2014 at 540.4 million euros. Revenue was increased by higher passenger traffic revenue and negatively affected by lower revenue from Aurinkomatkat Suntours and cargo traffic, as well as the elimination of revenue from businesses sold after the comparison period. Our profitability improved substantially, although our operational result showed a loss of 28.4 million euros.

The factors contributing to the improved result in addition to the increased revenue included further progress in cost savings as well as lower fuel prices. Unfortunately, the substantial appreciation of the dollar against the euro diluted the benefit gained from the fall in the price of jet fuel and significantly increased other dollar-denominated costs. The operational result also reflects the weak financial performance of Aurinkomatkat Suntours.

During the reporting period and in the preceding years, Finnair result has been affected by strong changes in the yen and / or changes in the dollar exchange rate. Therefore we started to report unit revenue and unit cost excluding fuel at constant currency during the review period. This change will show the actual development of our Airline Business more clearly. At the same time we adjusted the calculation method to reflect the structural changes that have taken place within the Group – the transfer of Flybe Finland’s own risk flying to Finnair’s purchased traffic, for example. On this basis, unit revenue at constant currency fell by 0.4 per cent and unit cost excluding fuel at constant currency rose by 1.1 percent on the comparison period. The increase in unit cost excluding fuel at constant currency is largely explained by changes in our traffic structure.

We are moving in the right direction, despite the fact that our result is still not at the level we are striving to reach. Our long-haul fleet renewal, which will start this coming autumn, will significantly improve the cost-competitiveness and customer experience of our long-haul traffic. At the same time, we will continue to focus on increasing our revenue through, for example, ancillary revenue. The positive effect of increased ancillary sales was visible already in our first quarter figures, although its share is still small. Finnair’s strategic targets are discussed in more detail in a separate stock exchange release that was issued this morning.

Finnair also announced its on-going strategy changes:

As a part of its annual strategy review, Finnair’s Board of Directors has approved a new vision and updated the company’s mission and strategic targets.

Finnair’s direction: Unique Nordic experience

Finnair’s new vision is to offer its passengers a unique Nordic experience.

Finnair’s route network connects Asia, North America and the northern regions of Europe and beyond through its hub at Helsinki Airport. The operations are based on quality, reliability, safety and design inspired by Nordic pure nature. The vision is expressed for example in easy-to-use digital services and in the enhancement of Business Class services. The goal is that as a result of the service offered at the airport, in lounges and on board, customers arrive at their destinations relaxed and with peace of mind.

Finnair’s vision gives direction to all Finnair employees and partners in the areas of customer service, operations or development of the company operations and services.

Finnair’s mission: fast and smooth connections

Finnair’s mission is to offer

· the smoothest, fastest connections in the northern hemisphere via Helsinki

· the best network to the world from its home markets.

Updated strategic objectives for the company

· Double Asian traffic by 2020 from the 2010 level

· Deliver a unique customer experience and achieve world-class operations

· Create shareholder value

The core of Finnair’s strategy is taking advantage of the growing demand for traffic between Europe and Asia. The strategy is based on the growing markets in Asia, fast connections between Europe and Northeast Asia, quality service, and cost-efficient, punctual operations. Helsinki’s geographical location provides Finnair with a natural competitive advantage, as the fastest routes between many destinations in Europe and megacities in Asia go through Helsinki. In implementing its strategy, Finnair is committed to creating added value for its customers and shareholders.

To achieve these strategic objectives the company Board of Directors has approved six strategic implementation areas for 2015 – 2017:

· Intercontinental growth with Northeast Asia focus

· Customer excellence

· People and Finnair culture

· Digitalization

· Funding and capital structure

· World-class operations

In its operations Finnair enters a new phase during the 2015–2017 period, as it becomes, from October 2015, the first European operator of the next-generation Airbus A350 XWB aircraft. Finnair aims to maximize the competitive advantage and ensure competitive funding for the fleet investments in order to achieve its strategic objectives.

Finnair’s financial objectives

Finnair’s Board of Directors increased the target level of Adjusted gearing from maximum of 140 percent to maximum of 175 percent and confirmed other earlier long term financial objectives:

· EBIT margin 6% over cycle

· EBITDAR margin minimum of 17% over cycle

· Adjusted gearing maximum of 175%

· Return on Capital Employed (ROCE) minimum of 7%

Image below: Finnair is centering its turnaround on the new Airbus A350-900.

Finnair aircraft slide show: