Finnair has released its 2025 outlook, projecting growth in capacity and revenue, but also acknowledging significant headwinds in the global aviation landscape.
While the airline anticipates a 10% increase in capacity (measured by available seat kilometers – ASKs), several factors cast a shadow over the forecast, creating a complex operating environment.
Projected Growth, But Challenges Remain
Finnair expects its 2025 revenue to fall between €3.3 and €3.4 billion, with a comparable operating result between €100 and €200 million.
This growth is underpinned by the planned capacity increase, which includes existing wet lease agreements. However, achieving these targets won’t be without its challenges.
Challenges in Q1 2025
The airline highlights several cost pressures impacting profitability, particularly in the first quarter of 2025. These include the newly implemented EU sustainable aviation fuel (SAF) distribution obligation, rising navigation and landing charges, and the timing of Easter.
All of these factors will disproportionately affect first-quarter performance. Furthermore, the airline explicitly states that these estimates do not account for potential impacts of industrial action.
This was a factor that significantly impacted Finnair in late 2024. In January 2025 alone, the estimated negative impact of industrial action on the comparable operating result was approximately €5 million.
2024: A Year of Mixed Results
Finnair’s CEO, Turkka Kuusisto, reflected on the airline’s performance in 2024. The fourth quarter showed strength, with passenger numbers up 9.1% and revenue increasing by 7.7%.
The comparable operating result more than doubled compared to the same period in the previous year, driven by higher revenue, improved passenger load factor, and lower fuel prices.
Capacity also saw growth, increasing by 3.3% and 4.1% when including wet lease outs. The improved load factor boosted unit revenue, and the decline in average ticket fares stabilized.
Weather Disruptions and Industrial Action
Despite these positive developments, the fourth quarter was marred by weather-related disruptions and industrial action by the Finnish Air Line Pilots’ Association.
These actions led to numerous flight cancellations, impacting over 60,000 customers and negatively affecting customer satisfaction, as measured by the Net Promoter Score (NPS), which dropped to 33.
Revenue Above 2023 Levels
Looking at the full year, Finnair’s passenger revenue remained at 2023 levels, while ancillary revenue saw a substantial 23% increase, largely due to ticket reforms introduced mid-2023. Cargo business grew by 7%, and travel services by 2%.
The airline’s route network remained balanced, with a strong presence in Asia and growing North Atlantic and European traffic. Full-year capacity growth, at 6.8%, was lower than initially projected due to industrial action and aircraft maintenance.
Looking Ahead: Strategy, Costs, and Customer Focus
For 2025, Finnair’s capacity growth strategy is focused on North Atlantic routes, aiming to drive revenue growth. However, the airline anticipates continued cost pressures from rising salaries, navigation and landing charges, aircraft maintenance, emissions trading, and SAF.
Finnair is currently finalizing a strategy update, prioritizing core customer needs, operational development, and cost competitiveness. This update will also include a partial renewal of its narrow-body fleet.
Kuusisto emphasized the importance of continuous improvement and cost efficiency in maintaining competitiveness. He also acknowledged the impact of disruptions on customer satisfaction and highlighted ongoing investments in disruption management to minimize customer impact.
Finnair is committed to deepening its understanding of customer needs to enhance its offerings and customer service.
Shareholder Returns
Following a positive financial performance and a strong balance sheet, Finnair’s Board of Directors has proposed a return of capital to shareholders of €0.11 per share.
This amount exceeds the target set in the shareholder return policy, reflecting the positive impact of one-off items on reported earnings per share.
Kuusisto expressed gratitude to shareholders for their support during challenging times and acknowledged the airline’s success in achieving its value creation targets. He concluded by thanking both customers and employees for their trust and dedication.
Summary
In summary, Finnair’s 2025 outlook presents a picture of growth potential tempered by significant challenges.
The airline continues its strategic expansion and focus on operational improvements. However, navigating the complexities of the global aviation environment, particularly cost pressures and potential labor disruptions, will be crucial for achieving its targets.
The focus on customer satisfaction and a renewed commitment to cost efficiency will be key to Finnair’s long-term success.
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