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Finnair Group Financial year April 1 - December 31, 2000

Finnair Group Financial year April 1 - December 31, 2000. FROM CRISIS TO GROWTH.  2002: Accelerating growth.  2001: Introduction of new structures.  2000: Adaptation and investment for the future.  1999: The moment of truth. We doubled our results.

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Finnair Group Financial year April 1 - December 31, 2000

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  1. Finnair Group Financial year April 1 - December 31, 2000

  2. FROM CRISIS TO GROWTH  2002: Accelerating growth  2001: Introduction of new structures  2000: Adaptation and investment for the future 1999: The moment of truth

  3. We doubled our results 1. Profitability: Profit before extraordinary items rose 103 % (125,1 MEUR) 2. Yield: Yield continued up (8,1% per RPK), successful elimination of loss making routes 3. Costs: Operating costs (excl. fuel) decreased 1,1% 4. Efficiency: World´s most efficient use of B757 fleet 5. Staff: New incentive schemes, 3,3 % productivity increase, 4,8 % less staff 6. Transparency: Quarterly reporting since Q1/1999, new Group structure January 1, 2001

  4. Focus on superior quality • 1. Quality: Most punctual (AEA) and best customer service (SoFie/IATA) • 2. Service: Best service brand in Finland (Markkinointi & Mainonta) and once again best ”Cellar in the sky” (Business Traveller) • 3. Focus on strong brands • New Finnair corporate image • Finnmatkat sold, emphasis put on developing Suntours

  5. Finnair Group key figures

  6. Improved transparency • The financial year will match the calendar year from 2001 • Key economical figures for 2000 are shown as pro forma • From the beginning of 2001 the financial reporting will be based on the new Group structure with six business areas in order to promote clarity and improve transparency

  7. Steady turnover growth

  8. EBIT over EUR 100 million

  9. Profit doubledProfit before extraordinary items and taxes

  10. Strong cash flow from operations MEUR % % of turnover

  11. Return on Capital Employed% Year 2000 WACC 8 %

  12. Return on Equity%

  13. Improved results with less personnelGroup personnel on average

  14. Productivity improvement ATK (1000) / person

  15. Investing in first class equipment

  16. Net debt decreased

  17. Finnair has a strong balance sheetEquity ratio

  18. Improved Gearing

  19. Cash earnings per share EUR

  20. Finnair’s dividend policy • “It is Finnair’s dividend policy to pay out at least a third of the earnings per share as dividend during an economic cycle. We try to take into account the company’s earnings trend and outlook, financial situation and capital needs for any given period.” • For the financial year 2000 a dividend of EUR 0.40 is proposed, which amounts to 38 per cent of earnings per share • Effective dividend yield 8.7% (spot price EUR 4.60 March 7, 2001)

  21. Competitive pay out -ratio Annual dividend % of EPS MEUR % * * Dividend proposal by the Board of Directors to the AGM is EUR 0.40/share

  22. Deep discount in Price to Book EUR

  23. Final quarter of the fiscal year1.10.-31.12.2000 • Strong development in yield continued • Revenue from flight operations/RTK + 5.8% • Revenue from flight operations/RPK + 7.4% • EBIT 28.6 MEUR (31.6) • Capital gains 25.4 MEUR (22.8) • Fuel costs up by 66.4% • Because of the financial year change, final quarter EBIT includes extraordinary items as: • provisions for profit bonus and incentive schemes • provisions for aircraft maintenance costs • revenue from unused flight documents Net impact from these and other items totals -12 MEUR

  24. Yield and Unit cost developmentChange to previous year % 1999 2000

  25. EBIT per Quarter MEUR 1998 1999 2000

  26. EBIT per QuarterChange to previous year, excluding capital gains MEUR * 2000 1998 1999 * Change excl. exceptional items due to change of fiscal year. These items include provisions for profit bonus and incentive schemes and for aircraft maintenance costs, revenue from unused flight tickets

  27. Finnair Group New management structure 1.1.2001 • Business divisions consists of more independent business units and subsidiaries in order to improve transparency and allow for more flexible and efficient operations in a shifting competitive environment • Each business unti will have its own business strategy, management team and its own remuneration principles • Responsibility for capital employed and for the return on it

  28. Profitable growth in 2001 • Growth with existing resources • Benefit from more integrated alliance co-operation • Efficiency with the new management structure • Agreements with all labour unions • Improved working atmosphereand internal communication • Modernisation of fleet with Airbus A320 family • eFinnair

  29. Online -sales growth scenario • Year 2000 total online -sales approx. 60.000 passengers • Year 2001 forecasts between 175.000 – 300.000

  30. Confident future • Underlying profitability expected to improve further • Capacity growth 1-2 % (ATKs) • Investments approx. 275 MEUR, fleet renewal continues • New growth from Asia • Fourth MD-11 aircraft on scheduled passenger traffic 2002 (Hongkong new destination) • Substituted by two leased B757 aircraft on leisure traffic

  31. Challenges this year • Consolidation of Group structure • Capacity utilization still low • Fuel prices • Aero and domestic feeder traffic • Preparedness for accelerating growth 2002

  32. Appendices

  33. Development index of jet fuel in 2000

  34. Changes in Passenger Traffic & Capacity TOTAL TRAFFIC % 25 1998 1999 2000 20 15 Traffic - Revenue Passenger-Km 10 Capacity - Available Seat-Km 5 0 -5 -10 -15 feb feb jun jun jun apr apr apr oct oct oct aug aug aug dec dec dec

  35. Number of passengers

  36. Distribution of scheduled traffic revenues2000

  37. Distribution of passenger sales in scheduled traffic2000

  38. Revenue tonne kilometres

  39. Strong cargo volume growth

  40. Distribution of cargo kilos2000

  41. Steady increase in technical sales Excludes revenue from the maintenance of Finnair operated aircraft

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