Finnair Group Financial Statements Release 1 January–31 December 2025

Finnair closed 2025 with modest top-line growth and a stronger Q4: Q4 revenue €789.5m (+0.8%) and comparable operating result €61.7m (Q4 2024: €47.9m); FY revenue €3,106.2m (+1.9%) and comparable operating result €60.1m (FY 2024: €151.4m) — the FY comparable result was hit by ~€68m of industrial action. Operating result for the year was €64.2m and EPS €0.09; net cash from operations €401.9m and Finnair proposes a €0.09 per-share capital return in two instalments. Management guides 2026 revenue of €3.3–3.4bn and comparable operating result €120–190m, highlights sensitivity of ~€34m per 10% fuel move and ~€31m per 10% USD/EUR move, and warns of continued cost pressure from environmental regulations despite supportive demand trends.

Analysis

Market structure: Finnair’s Q4 strength and guidance (2026 revenue €3.3–3.4bn; comparable op result €120–190m) imply a re-rating opportunity versus European peers if Asia-Europe demand continues to outpace North Atlantic. Key beneficiaries are Finnair (HEL: FAA1V) and wet-lease providers; losers include North Atlantic focused carriers and intermediaries with weak yield exposure. The 5% ASK growth plan and rising PLF (+1.1pp FY) point to tightening seat supply in Finnair’s core thin routes (Asia-Europe), supporting fares if execution holds.

Risk assessment: Major tail risks are renewed industrial action (~€68m hit in 2025), geopolitical shocks affecting Asia traffic, and accelerating SAF/regulatory costs (NAV/landing + SAF could erode >€30m). Near-term risks (days–weeks): winter weather cancellations and March 26 record date; short-term (weeks–months): Q1 ops and fuel/FX volatility (10% fuel = €34m; 10% USD/EUR = €31m); long-term: fleet investment missteps and sustained higher SAF burdens.

Trade implications: Tactical long equity exposure to Finnair into the March 26 capital return and before Q1 report (buy window now–Mar 25) is warranted, hedged for fuel/USD moves. Use 6–12 month call spreads to play guidance upside while selling nearer-term calls into summer capacity announcements. Rotate away from pure North Atlantic names (IAG, LHA) and towards Asia-Europe exposed carriers and aircraft lessors.

Contrarian angles: Consensus may underweight Finnair’s upside from Asia recovery and the balance-sheet flexibility from the €300m bond; the market may over-penalise one-off industrial action. Conversely, investors may underappreciate persistent SAF cost inflation and FX risk — a catalyst that could halve the guided mid-case if fuel or USD move 20% adverse. Historical parallel: post-2016 capacity resets where small, Asia-focused carriers re-captured yields faster than large legacy peers.

Key Decisions for Investors

• Establish a 2–3% long position in Finnair (HEL: FAA1V) equity between now and 26 Mar 2026 to capture the €0.05 capital return and potential re-rating; hedge with a fuel collar (buy Brent $75 puts / sell $95 calls sized for €34m sensitivity) or buy USD call options to offset a stronger dollar; target 30–40% upside over 12 months, stop-loss 18%.
• Implement a 6–12 month call spread on Finnair: buy ATM 9–12 month calls and sell 20–30% OTM calls to fund premium; size 0.5–1% notional of portfolio for asymmetric upside to the company hitting the lower/higher end of €120–190m guidance.
• Execute a relative value pair: long Finnair 2% vs short IAG (LON:IAG) 2% for 6–12 months — rationale: Finnair gains from Asia recovery and shareholder returns while IAG is more exposed to weak North Atlantic yields; rebalance after Q1 (22 Apr) or if Finnair’s comparable op result misses guidance by >€30m.
• Reduce exposure by 50% to North Atlantic-heavy carriers (e.g., Lufthansa LHA.DE, IAG) in favor of Asia-Europe players and aircraft lessors for the next 3–9 months; re-evaluate after July 22 H1 report or if jet fuel rises >10% from current levels.