By Agata Rybska and Agnieszka Gosciak
(Reuters) – Finnair reported a second straight quarterly operating profit on Wednesday as the impact of COVID-19 lockdowns eases on its key Asian business, and said it looked forward to potentially “huge” demand from the Chinese market.
China’s easing of some travel restrictions in December had come “earlier and more suddenly” than the company had predicted, Topi Manner, chief executive of the Finnish flag carrier, told an earnings call.
Its shares hit their highest intraday level in a year.
“We expect that the demand … eventually will be sizable, even huge, to and from China (and) will materialise with a bit of a time lag,” Manner said, noting the country would first need to sort out passport and visa issues.
Manner also said the higher ticket prices implemented by airlines both domestically and globally due to soaring fuel costs might not be easing even as oil prices come down.
“There is a prospect of a future in which air fares will not fall from their current level, but will instead be subject to long-term upward pressure,” Manner said.
Finnair, whose pre-pandemic strategy relied on Asian routes and its short fly-times over Siberia, saw its volumes slump due to lockdowns and then the closure of Russian airspace after Moscow’s invasion of Ukraine.
“With the fading impacts of the pandemic, and now China being open, we expect that normal seasonality will return to our business”, Manner added, noting this meant Finnair would likely post an operating loss for the first quarter.
In the fourth quarter, 31.2% of its passenger revenue came from Asian traffic, versus 41.1% in the same period in 2019.
Finnair expects to operate at 80% to 85% of its pre-pandemic 2019 capacity this year, measured in available seat kilometers (ASK), but Manner said this hinged on market developments and the pace of recovery in China travel.
Finnair said it expects to significantly increase its 2023 revenue compared with the previous year, but not yet to reach pre-pandemic levels.
Its comparable operating profit reached 17.9 million euros ($19.2 million) in the fourth quarter, against a loss of 65.2 million a year earlier.
Finnair shares were up 1.1% at 0.5345 euros by 1506 GMT, after rising as high as 0.5520, their highest since February 2022.
($1 = 0.9336 euros)
(Reporting by Agata Rybska and Agnieszka Gosciak in Gdansk; Additional reporting by Elviira Luoma; Editing by Milla Nissi and David Holmes)
