Sophie Jolly: Hello everybody, and welcome to Finnair's Q3 webcast. My name is Sophie Jolly, and I am working as IR here at Finnair. First time for me this time, so I am very happy about that. With me here today is CEO Turkka Kuusisto and Pia Aaltonen-Forsell, who will present today. I think that we will take the questions after the presentation. So in normal manner, first Turkka will start, and Pia will continue, and after that, questions. Without any further comments, please, Turkka.
Turkka Kuusisto: Thank you, Sophie, and very good afternoon, and welcome to our Q3 result presentation. As in line with the preliminary information that we submitted two weeks ago, we did report a very strong Q3 2026. Revenue grew by 14.2%, and that actually stems from basically all the traffic areas that we have. I will cover that in a bit in more detail. Then, of course, the double-digit growth on top line also resulted in very positive development when it comes to comparable operating results. EUR 84 million is well above the compare quarter last year, even though the compare quarter was influenced by the industrial action at the time. All in all, if we factor back the EUR 80 million to the EUR 50.7 million that we reported, we can be very satisfied with the profitability development of Finnair during the Q3.
Turkka Kuusisto: I am especially happy, Pia will discuss this in more detail, but the operating cash flow was close to EUR 180 million. Also, given the investment scheme and the fleet renewal programs that we are undergoing, this is super important when it comes to financing the fleet investment and also preparing our capacity for the future. Load factors grew by, on average, 2% across the traffic regions, hitting close to 82%, which is a relatively good number when it comes to the historical performance of Finnair. Then, of course, something that we also want to discuss with you today in greater detail is the hedging strategy and hedging policy. We did have 81% locked when it comes to jet fuel price for the Q3, and we are somewhat north of 70% for the Q4.
Turkka Kuusisto: The current hedging ratio for the forthcoming fiscal year is 34%, but Pia will cover this in more detail in her section. Just a reminder that based on the decisions made by our AGM earlier this year, the board of directors decided yesterday that the second installment of the capital repayment will be paid next week on Wednesday. If we then take a deeper look into the network choices that we have made and the development of the traffic regions that we have, if I start with the Middle East, we still continue to suspend, or we have suspended all of our flights to Middle East because of the safety and security situation, and this is valid until further notice.
Turkka Kuusisto: Maybe just to once again put it into a context, when we started this fiscal year, we had planned to allocate 3% of our capacity measured by ASK to the Middle East region, therefore, the financial impact of the suspension is rather limited. We will take, for instance, Asia first. Very positive development. Load factors close to 86%, so the flights have been literally full and also very happy with the yield development when it comes to that region, close to +8% when it comes to unit revenue.
Turkka Kuusisto: North Atlantic traffic, even though maybe one could argue that the compare quarter last year was maybe a bit soft, but given the numbers that we are reporting today, very positive development, both revenue and RASK-wise, and also load factors developing positively and also the yield development close to +14% in year-over-year comparison. Also, when it comes to Europe, the new destinations that we launched for the summer season, 12 new destinations in Europe also supported the ASK growth and also revenue growth by 15%. We can be very satisfied with this balanced revenue development and also yield development across these three largest regions of ours. Domestic traffic in Finland is always somewhat seasonal, depending on customers' preferences, shall they travel abroad during their summer holidays or not.
Turkka Kuusisto: Therefore, ASK was somewhat below last year, but at the same time, revenue and RASK developed favorably. Speaking of customers, we continue to provide improved customer experience to all of our customer groups. July is typically the most challenging when it comes to OTP, especially given the ATC restrictions in Europe. Also this summer season, we did face quite a lot extraordinary weather conditions in form of thunderstorms, for instance, in Central Europe. Therefore, NPS in July was a bit lower, but very happy to report that in August and in September, we are back on track, and the average NPS for the Q3 was 38. Again, is it a good or bad number? Based on the benchmark that we have or peer group that we have composed, we are trending well above the 33, which is the peer average.
Turkka Kuusisto: If we take a deeper look into the core customers of ours, which are in the center of the strategy that we launched a year ago, Finnair frequent flyers are actually trending at 44, which is a very good result, in my opinion. Speaking of the strategy, some highlights. We are adding capacity and new connections. We just launched the Melbourne connection from Helsinki via Bangkok. The first flight was flown starting from Sunday night, and the plane landed 24 hours later in Melbourne. Based on the reports that I have received, the turnaround has been successful and the aircraft and the crews are already back at Helsinki or at least returning to Helsinki soon. We are expecting to receive the latest A350 in our fleet during this year, but the operations will be started only at the beginning of 2027.
Turkka Kuusisto: As previously communicated, we have signed letters of intent when it comes to sourcing second-hand Airbus A320 series aircraft to support the so-called bridge solution when it comes to fulfilling the capacity gaps that we have to support the strategic growth parallel with the entry-into-service project when it comes to Embraer E2s that we announced also late March this year. When it comes to operational stability, operational excellence, when we try to analyze the good performance in addition to strong market demand, obviously the market's capability to pass through the elevated fuel cost price to the ticket prices, we can also be very satisfied with Finnair's own operations and own actions. In addition to network management, capacity management, I argue that the operational platform of Finnair is functioning very well as we speak. Regularity of the flights, 99%.
Turkka Kuusisto: Connection reliability, 99% as well, and OTP at our target above 80%. In order to further enhance the customer experience and the digital journey of our customers, if you like, we are launching a new mobile application next week, and the objective is to provide the new application to all of our customers by the end of November. Going into the commercial strategy of ours, again, very positive result when it comes to ancillary sales or revenue per passenger, 9% growth, and all in all, parallel with the passenger volume growth, the ancillary revenue grew by 16.3%, again, supporting the commercial strategy and our ambition level towards 2029. Also, Finnair Plus, the frequent flyer scheme or program, is becoming more popular among the core customers and the total customer population of Finnair, and 2.6 million active Finnair Plus members at the end of the quarter.
Turkka Kuusisto: But maybe with these highlights and kind of setting the scene, I leave it for Pia to discuss the nuances of the Q3 report.
Pia Aaltonen-Forsell: Thank you so much, Turkka. Ladies and gentlemen, it is of course a pleasure for me to present these strong figures for the quarter. Although when we look into the future, fuel, the volatility, and the war in Iran, these all still have impact. Let us try to cover those in a few slides. Let me start with just the highlights, really the high-level numbers, just to give that overview of the magnitude of where we are. Starting obviously with the revenue, I think Turkka has already described the various market areas, but I really think that we can see the strength of being a network airline of the long-haul destinations, and the strength not only towards Asia and the Atlantic, but also within Europe.
Pia Aaltonen-Forsell: I would say the strength of the market combined with the good performance and also our strategy execution have certainly boosted the revenue figures. Looking at the result, obviously I looked back in the history books and I did find one Q3 that was a little bit higher, and that was back in 2023. But I think this is a very strong performance in a super volatile year, in a year where from the start of the year we have had to tackle the war, the inflation, the impacts on fuel. Most importantly, of course, from our side, fuel has not been a supply issue as such. We have had all the fuel we have needed to fly, but of course, it has been a lot a cost issue. Turkka already boosted a bit the cash flow.
Pia Aaltonen-Forsell: I will come back with a few more words on that, but I do think we should put this into the perspective. We have almost EUR 180 million in this quarter. However, we are on a strategic journey where we want to put EUR 2 billion into CapEx by 2029 in cumulative terms. So it is also clear that to secure that strategic journey, we need the cash flow, and this is a good proof point of that capability. Next, I want to deep dive a little bit into the components of the result. We have actually brought for you a traditional variance bridge. So here we go, looking a bit at that. I think it was well worth explaining it in this quarter because when we compare with the Q3 a year ago, obviously there were still some impacts from industrial actions.
Pia Aaltonen-Forsell: If we would really compare the true underlying operative performance a year ago, we would start from 69, we ended up at 84 in a year where fuel and the fuel cost pressure has been the big topic. Our hedging has protected us, and I will come back to that separately. So you see here the higher effective fuel price clearly being the cost component that was growing the most. But you also can see that in this quarter, we were overcompensating that with higher passenger yields. I think it is good to understand a bit the direction going forward. Hence, we will discuss also the fuel and the hedging in a few next slides. I will stop with that here. Out of the cost items, I want to comment two more.
Pia Aaltonen-Forsell: We perhaps haven't discussed it so much this year because of the obvious big topic being the fuel costs. But environmental regulation in Europe, no more free emission allowances and the treatment, the obligatory sustainable aviation fuel quotas, et cetera, all of these are also impacting our costs, so we want to be transparent with that. You may recall from last year that we had this approximately EUR 10 million per quarter more cost, and it sort of seems to continue here. My final comment on the cost side relates to staff costs. You see that it has increased year on year. There's a few elements I want to comment relating to that. The first one is that based on our growth strategy as well, we have had some increases in headcount.
Pia Aaltonen-Forsell: That's of course, a low digit, one digit figure in percentages, but we are gearing up to also being able to grow. We've had some inflation, but maybe half of this increase really is in the delta, when it comes to various staff incentives, short-term incentives, et cetera, because last year we were not in a position very favorable for that. But this year, also based on our guidance, looks strong. Then a short comment on the more positive, the dark blue bars here, you really see this shift. In Q2, we spoke a lot about our planes being really full and the situation, especially geared towards Asia, really higher load factors. You see that that has continued, but at the same time, it's really the yield that has also supported in this quarter.
Pia Aaltonen-Forsell: Another way to look at this is to compare the revenues per available seat kilometers and then also the cost. I'll do that still quickly in the next slide. Also based on our strategy, this is a measurement that we've said we will follow up and I think for two reasons. First of all, when we look at the revenues per available seat kilometers, we have important elements within our strategy. For example, the ancillary sales, the choice that we are offering to our customers, and that should help us to grow this figure over time. At the same time, obviously, we've had a strong market, and you see that revenues per available seat kilometers have increased by more than 12%.
Pia Aaltonen-Forsell: So has increased more than the costs, but the costs have also increased by 9%, and that's obviously on the back of the fuel situation and the other items that I have just commented. Most importantly, of course here, is that we keep a clear benefit for the revenue growing more, and in this quarter, I think we were well succeeding with that. I still want to pick on one thing from the cost that Turkka did actually mention, but I do think it's so important, and it is that operationally, we had a good quality of operations in the third quarter. When we managed to do that, it also helps to stabilize the cost situation. Obviously we should think about these from the context of the full Finnair system. Now on to a few comments about our fuel.
Pia Aaltonen-Forsell: The first picture may be familiar to you, as I am sure that these are topics we are all following, but we still wanted to build into one graph the situation for the crude oil, so really sort of Brent. This is dollars per barrel. Then we built in the diesel, because diesel is also an important refined product, and we all see that through the headlines all the time right now. Then on the top here, you see the development in the brownish color for the jet fuel. You see how that has been the tightest market and really the most constrained situation, also really leading to elevated prices compared with historical levels here. I think this context is good to understand.
Pia Aaltonen-Forsell: We saw during the summer, when there was this short window where peace seemed maybe a little bit making progress, that there was a pretty rapid drop in the Brent prices, the crude oil prices. Now the refined products will also still need to digest any supply chain issues, any damage that may have been caused in the war that maybe is not so transparent right now. So there might always be delays. However, we have, of course, seen also in the summer the drop, and now we see the elevated prices again. So on the back of this information, we should also consider what is our hedging position and how we look at the situation going forward. I would never dare to say that there is a perfect crystal ball that would tell us what will the price of jet fuel will be for next year.
Pia Aaltonen-Forsell: I think we need to take into account a number of considerations when we think about the impact for Finnair. But one important one obviously is hedging. Therefore, if you look at this still for Q4, even for Q1, you can see that our hedging ratios are fairly on a good level. We have also brought you the detail of what are the prices that we have locked in with these hedges. So you also see that those are on historically even, I would say, pretty reasonable prices. Now, the challenge obviously being that in a market that is so volatile and with so high prices, how do you then lock in low prices again? Well, that is fairly difficult. So we are at the moment, we have touched the lower limit of our hedging policy.
Pia Aaltonen-Forsell: We are a little bit below in some quarters. I think the direction going forward is that we would be looking for that right market opportunity to grow again the hedging levels. More towards being on a somewhat higher level now next year is at 30%. But we also need to find the right momentum for that. I think we have a good understanding of what we want to do and the direction is clear, but the situation right now at the market is very volatile. So this is, of course, something that will impact a lot our thinking, our planning, and the way how we need to consider the agility for next year, the cost levels for next year, et cetera. But 34% is the hedged amount for next year as we speak. Then my final slide.
Pia Aaltonen-Forsell: With the balance sheet, I want to say a few words about the future. The first one is unflown ticket liability. You can see and observe the strength of the market and the demand for Finnair's flight in the fact that the unflown ticket liability is up 22% compared with a year ago. I think for a Q3 end, which still seasonally is much lower than compared with what we had at the end of June, this is a strong number. I think that speaks to the market strength at least for one quarter going forward and even into the winter season and into next year. For our future, Turkka has spoken about the investments. Our thinking for this year is that we will spend EUR 444 million for CapEx, while we spent a bit north of EUR 200 million so far.
Pia Aaltonen-Forsell: As Turkka also said, we are still expecting one more Airbus A350 to be delivered this year and then to be taken into use to be flying next year. I think that plan is pretty solid that we have right now. Our balance sheet is strong. Our leverage is currently at 0.6 times, so it means that we are well prepared for the investments ahead of us in the next years. Turkka, I think this is a good time to hand over to you to talk a little bit about the fleet still.
Turkka Kuusisto: Thank you, Pia. Maybe just as a reminder, as we have quite a few parallel fleet investment initiatives ongoing, A350 mentioned already a few times, and then this Embraer smaller narrow-body campaign ended up when it comes to selecting Embraer as our next generation smaller narrow body that we communicated late March earlier this year. The key point or core message being that we have a firm order of 18 E2s, and then in conjunction with this E2 decision, we communicated that we will source up to 12 secondhand or used Airbus A321 family aircraft, out of which six letters of intent have been signed. Also we are strengthening our regional fleet in form of a few selected ATR 72 investments. Then maybe referring back to the strategy launch late last year, the investment range being from EUR 2.0 to EUR 2.5 billion.
Turkka Kuusisto: We have earlier communicated that with this composition of fleet sourcing and investments, we will be towards the lower end of the range. Then the next slide, only repeating what we already communicated 13 October, two weeks ago. The outlook and guidance are now unchanged. We aim at increasing the capacity by ASK wise by 1%. Number of passengers will grow approximately by 7%. We are repeating the financial guidance that we provided you with two weeks ago. Revenue is estimated to be from EUR 3.5 to EUR 3.6 billion, whereas the comparable operating result range is EUR 175 to EUR 220 million. I guess, Sophie, that with this, we are ready for the Q&A part.
Sophie Jolly: Yes, we are ready for the Q&A. You have the possibility to ask via the phone line or via the chat. Let's take the first question from the lines.
Operator: If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Andrew Lobbenberg from Barclays. Please go ahead.
Andrew Lobbenberg: Oh, hiya. Can I ask a first question, which is pretty basic, I am afraid. You are guiding for 1% capacity increase for the full year. What does that imply for Q4? Because by our calculations, it implies a pretty high Q4 growth if you are going to get to 1% growth for the full year, taking account of wet leases.
Pia Aaltonen-Forsell: Yeah. Hi, Andrew. Pia here. Thanks for the question. Sorry that I do not have the figures off of my mind, but I think we have raised our guidance for the top line. We have also raised the range for the EBIT. Clearly, we spoke about the unflown ticket liability, et cetera. I think this all speaks to the fact that we have seen a stronger market momentum than maybe was expected earlier. But sorry, we will provide that Q4 figure and I will make a note of that. We will provide that.
Andrew Lobbenberg: Okay, great. Can you speak a little bit about what you expect to see with that Asian unit revenues? I think they were up 15% in Q2 and up 8% in Q3. What is the trajectory into the winter and especially with all those seats going to Bangkok and indeed down to lovely Melbourne?
Pia Aaltonen-Forsell: Andrew, if I can start, Turkka, of course, if you want to comment on the market more, please feel free. I think, first of all, if you just look at our position, both the capacity utilization, if we look at the yields, we have had strong development. Obviously, Q2, there was even this massive disruption in the market and certainly almost a pressure from that, but that has continued strong into Q3. I do not think we have given specific guidance for the different market areas, but I do not think our situation or position in Asian traffic has changed in any way.
Turkka Kuusisto: Yes. I would refer to the unflown ticket liability that you mentioned because the composition of the unflown ticket liability is, in my opinion, reflecting pretty well the current momentum that we have witnessed.
Andrew Lobbenberg: Okay. Nice. Can you talk a little bit about how you trade between economy and premium? Most of the other airlines around the world talk very confidently about premium and much more cautiously about economy class. I think you guys do not have a very large premium cabin on your aircraft, no disrespect, and yet your numbers look really strong. How are the trends between the front of the bus and the back of the bus?
Turkka Kuusisto: Thank you, Andrew. I think that we have also seen this premiumization trend. Our business class and premium economy have been actually witnessing very good utilization or load factors. But at the same time, referring back to the overall load factors that we have reported, all important traffic areas north of 80%. So the economy class has been well-utilized.
Andrew Lobbenberg: Okay, cool. If I may, just one more, and then I will shut up and give other people a chance. Pia, you spoke about hedging and explained how challenging it is, but you have not really told us what you are going to do. You are locked in hedges at the moment. You show us from EUR 750 to EUR 800 per metric ton, but at the moment, the price out to December does not fall below EUR 1,100 and below EUR 1,200. So are you frozen? Are you not adding, or are you considering adding but letting the effective price climb quite steeply? What is your policy? Or has the board set a defined limit, a price limit above which you will not add to the hedges? How are you working that?
Pia Aaltonen-Forsell: Yeah. Thanks, Andrew. I think you are touching one of the most difficult decisions to take right now because it is clear that having more insurance, having more hedges in place in many ways would give, let us say, a bit more relief or a bit more space in the whole system. But nonetheless, I think the fact of the matter is just that we also need to understand that no one knows exactly what the prices will be going forward. We will need to be very vigilant, as we have been now as well. We were on the market and we added hedges in July. But now we have taken a little bit of a slower pace and not really adding hedges because of the very high volatility and also, as you alluded to, what prices are there out there in the market.
Pia Aaltonen-Forsell: Of course, we see the price curve in backwardation. We see the prices coming down over time, also in the futures market, but let us try to just take this calmly, step by step. The direction clearly is that we would like to add hedges, but we will be carefully considering every step of doing that. When doing that, considering the situation, of course, in the jet fuel market, but also considering the broader picture of how we continue to see the demand. Today, we have spoken about that we continue to see it strong and how we continue to see the whole market developing. So I would assume that this will lead to a gradual hike in the portfolio of hedges. If we add right now, they are more expensive. So that is why we probably need to add gradually.
Pia Aaltonen-Forsell: We have a very active team working with this and following the markets all the time, and I think that is the way we need to continue to work.
Andrew Lobbenberg: Okay, super. I will be quiet and let others have a go, but if you could come back to us with the Q4 capacity growth, that would be great.
Pia Aaltonen-Forsell: We will.
Turkka Kuusisto: We will. Thank you.
Andrew Lobbenberg: Thank you.
Pia Aaltonen-Forsell: Thanks.
Sophie Jolly: We have no questions in the chat, so let's continue on the lines.
Operator: The next question comes from Jaakko Tyrväinen from SEB. Please go ahead.
Jaakko Tyrväinen: Good afternoon. Thanks for taking my questions. If I start with a bit of a broader one, I know it's early days to comment on this one, but could you give any kind of an indicator for the 2027 capacity projections that you are working right now? I could assume that the overall industry would start cutting from the lowest profitability routes as the fuel price come through the hedges as we are seeing now.
Turkka Kuusisto: If I start and maybe, Pia, you can then supplement. We are, of course, monitoring the route level profitability on daily basis and as we already discussed at length this year, the hedging policy and hedging strategy has given us time and protected our profitability very well. But at the same time, what we reported today, 8.5% yield growth during Q3, but without going into the too detailed view on the 2027 outlook, I think that we should then focus on the strategy that we launched a year ago. Our objective is to grow by some 4% on CAGR level towards 2029. But of course, we need to institute and maintain the needed flexibility if the situation with the elevated fuel price continues.
Turkka Kuusisto: Bit of an open-ended answer, Jaakko, to your question, but the ambition is still to grow, but of course, keep our sensors and radar screens alerted when it comes to route level profitability.
Pia Aaltonen-Forsell: Turkka, thanks. I think you already said the most important thing, which we have a strategy and we have a direction. I think embedded in that strategy is also the increases in the fleet that Turkka has described in more detail earlier in the presentation, and that remains an important element. Then, of course, we all know that we have an aging fleet and obviously that leaves us some room to maneuver. It also means that we have lower capital costs on some of the more aging part. In terms of value of our fleet, obviously, we have a little bit north of 40% in our own balance sheet, which also gives us some flexibility compared with then the rest, obviously being leased. Number of aircraft, it is even much higher what we have in our own.
Pia Aaltonen-Forsell: I think we have inbuilt certain flexibility elements, and that probably remains a key question going forward, that we continue to plan according to our strategy, and we remain flexible for if the market situation would worsen or turn negative.
Jaakko Tyrväinen: Good. Thank you. Then a bit of a more specific one and short question on the unflown ticket liability and the balance sheet, which is up 22%. Is your booking curve meaningfully longer versus last year, or is the shape pretty much similar that you saw last year? I am just trying to understand whether this is just reflecting the executed price hikes and rising volumes.
Pia Aaltonen-Forsell: I think there are several elements impacting this, and of course, as we have seen the higher yields, that is the current market situation. That is how the market feels right now. But we have also seen the higher capacity utilization, and I do think, looking into Q4, for example, well, certainly, Christmas will be a busy time. It is good time to book tickets now, by the way, if you still want to do that. Then it follows the normal curve that also further into the winter season and even into next season, there are some bookings. But I think there the curve is quite normal. So I do not see a dramatic shift in the curve in any way or form, but in terms of, hey, suddenly everyone books for Easter or something like that.
Pia Aaltonen-Forsell: I mean the curve sort of follows a similar form, but we clearly can see it is engagement of customers who want to book their tickets already now.
Jaakko Tyrväinen: Good, thanks. Perhaps I am already too late for the Christmas bookings, but I will definitely book the summer tickets.
Pia Aaltonen-Forsell: Jaakko, you should still try. Yes.
Jaakko Tyrväinen: Very well. My last one, also a bit more detailed one on the ancillary per pax, which is nicely up in the past quarters as well as in Q3. Do you have any tools in the box to continue such trend that we have seen in 2026, also in 2027, or will the kind of comparison numbers be tough in that sense?
Turkka Kuusisto: Of course, it becomes more tough year after year because when the total volume of ancillary revenue increases, that is pretty much in the spotlight of our commercial strategy. We do have a kind of a pipeline, a funnel of new ideas. I think that also we haven't fully utilized the potential that we have when it comes to selling the existing product portfolio, especially when it comes to seat selection, extra luggage et cetera. Of course, that is getting more difficult, but we are more than committed to continue the growth. We do have a very solid pipeline of ideas and also mechanisms to improve the so-called conversion rate when it comes to the existing product portfolio.
Pia Aaltonen-Forsell: Turkka, we have, of course, we are launching the new app, and hopefully this makes it as well easier.
Turkka Kuusisto: Yes, that is correct.
Pia Aaltonen-Forsell: from a customer perspective.
Jaakko Tyrväinen: Excellent. Thank you. That is all from my side.
Turkka Kuusisto: Thank you, Jaakko.
Pia Aaltonen-Forsell: Thank you.
Sophie Jolly: Thank you. We will take a question from the chat, and this is Invest and Raul who is asking that, "Given that the Finnish corporate tax will decrease from 2027 and you have a large tax asset, will you book a decline in those assets in Q4 and does that have a P&L impact?" I think this is for Pia.
Pia Aaltonen-Forsell: Yeah. Thanks.
Turkka Kuusisto: Definitely.
Pia Aaltonen-Forsell: A nice technical question, but of course, it could impact EPS, so it is a very fair question. We need to follow this development because if there is a decision really about this before the year-end, then I think we should. I am looking a bit at Jussi here as well in the room, in all fairness. That is kind of how accounting laws are. So, if we get this before year-end, then we would see a booking and sort of order of magnitude from where we stand right now, I do think it could be north of EUR 10 million, maybe even up to EUR 20 million. But this is just mathematics based on the 2% decline. So I think we all need to follow the news. If there is a decision, there should be a booking.
Pia Aaltonen-Forsell: If the decision for some reason is delayed, then it will be a topic for next year.
Sophie Jolly: Yeah.
Sophie Jolly: Good. Keep up following Finnair. Then we have, I think, still somebody on the teleconference, so let's jump over there.
Operator: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Piri Muthu from MNI. Please go ahead.
Piri Muthu: Hey, guys. It's Piri from MNI Credit. Congrats on the numbers. I just wanted to ask four questions. The first one was, it looked like a little deceleration in Asia. Is there any driver behind that?
Turkka Kuusisto: If you are referring Q3 versus Q2, maybe there is
Piri Muthu: Yeah
Turkka Kuusisto: some tailwind kind of decelerating when it comes to the situation in the Middle East. But then again, I think that the performance throughout Q3 in Asia was still super strong.
Piri Muthu: Okay. On a related point, the yields were up 8.5%. Jet fuels continued rising. Are you seeing double-digit increases so far into Q4?
Pia Aaltonen-Forsell: Piru, if you are asking about yield development into Q4,
Piri Muthu: Yes
Pia Aaltonen-Forsell: then I just think we need to remain with our comments on looking at the unflown ticket liability. We see that the booking situation has remained really strong, but that's about as far as we can kind of comment the prices going forward.
Piri Muthu: Okay. Is it fair to say here that it was an acceleration you're seeing so far?
Pia Aaltonen-Forsell: Yes. If we really talk until the end of Q3, then there really was this sort of shift that the Q2 result was driven a lot by higher load factors. In Q3, we also saw the better yields, so the better ticket prices contributing. That's really what we saw sort of during the reporting period, and the unflown ticket liability also confirms that good momentum in the market has continued.
Turkka Kuusisto: Yes. Then I guess it's worth mentioning that the Middle East carriers are currently flying about, let's say, 95% of their pre-crisis capacity. That's also a kind of evidencing that there is no more, let's say, tailwind from the closure of Dubai and Doha that we witnessed during Q2. This is more or less a more normal market situation now.
Piri Muthu: Thanks, guys. The third question was O&D versus transfer traffic. Can you disclose mix for that right now, just looking at the Middle East disruptions and how that's impacted you versus last year's mix?
Pia Aaltonen-Forsell: Yeah. I don't think we have regularly updated on how big is the transfer share, but I do think we can say that it has continued strong. I think that's also supporting the fact that we see strong Asia, we see strong North America, and with that, we also have seen stronger Europe. A part of the stronger Europe was our new destinations for the summer, which I think is just such a highlight and it's great mentioning it, but clearly a part was also just supporting kind of the full network. With that being said, the transfer passengers remain important for Finnair.
Piri Muthu: Okay. Thanks, Pia. Is it fair to say it was over 50% this quarter or tracking above 50%?
Pia Aaltonen-Forsell: More or less. I think that's what we have historically shared as well.
Piri Muthu: Okay, sure. Thank you. The final question, guys, was on leverage. It has dropped towards half a turn. You flagged the two to two and a half billion CapEx program, but if I am not wrong, that does not include the used A320s. Is there any total spend that is likely to come up a bit more given the leverage has fallen back either because of the A320s or lease buybacks?
Pia Aaltonen-Forsell: Those are super important questions for the next year to consider. I do not-
Piri Muthu: Sure
Pia Aaltonen-Forsell: I think there is always the consideration you need to take almost for every aircraft that we are getting. Can we get it to our own balance sheet or should it rather be a lease? But the situation in the market is one where very often a lease is also the best alternative, just from the kind of overall contemplation. So I think if we would have planned for lease buybacks, et cetera, that would be material, then we would talk about them at the point where they are more mature. So nothing really to report on that right now.
Turkka Kuusisto: Yes.
Piri Muthu: Thanks, Pia. Thanks, Turkka.
Turkka Kuusisto: Thank you.
Pia Aaltonen-Forsell: Thanks.
Piri Muthu: Thank you.
Sophie Jolly: We have no questions in the chat. Let's give the teleconference one more chance, opportunity. Is there anybody wanting to put a question in? It's silent, so no more questions, but Turkka, I think you have somebody you want to introduce.
Turkka Kuusisto: Yes. Thank you, Sophie. Today it's an important day. It's time to thank Pia. We have agreed that Pia will take care of this Q3 reporting, and she will now pursue opportunities outside Finnair, but we will be in great hands of Jussi Siitonen, who will be our new CFO. Jussi, floor is yours.
Jussi Siitonen: First of all, hello everyone. Thank you, Turkka. What I can say here is that Pia has done an excellent job in her CFO position, leaving the whole team in excellent condition. It is easy to start building on that one. Also, when it comes to my role as CFO, I will continue where Pia left as supporting strategy, and therefore no changes there. Absolutely no drama in this change.
Turkka Kuusisto: Thank you, Jussi. Thank you, Pia, and thank you all for joining us today, and I guess it is, Sophie, time to wish-
Sophie Jolly: Yeah
Sophie Jolly: great continuation of the day.
Sophie Jolly: Yes. Thank you everybody listening in. Let us see, I hope to see you all in February again when we have our full year 2026. If you have questions before that, I surely want and hope that you have, please put a comment to investors@finnair.com. Have a great day. Thank you.
Turkka Kuusisto: Thank you.
Pia Aaltonen-Forsell: Thank you.
