Good day, ladies and gentlemen. I'm Erkka Salonen from Finnair Investor Relations, and it's my pleasure to welcome you all to this Finnair's third quarter 2021 earnings call. I have here with me Finnair's CEO, Mr. Topi Manner, and he is joined by the CFO, Mr. Mika Stirkkinen, for the Q&A session. I will now turn this call over to you, Topi. Please go ahead. Thank you, Erkka, and hello, everybody. Welcome to this Q3 earnings call. The big thing related to Finnair Q3 was that the travel restarted, especially in Europe. While we say that, it is important to note that as of today, only half of our markets are open, effectively European Union as well as U.K. Now recently, we have been getting good news in terms of long-haul markets also gradually opening. Thailand communicated last week that they will be opening to 46 countries, including Finland and Sweden, from where we are flying to Thailand. As we all know, U.S., will be opening for the fully vaccinated on the eighth of November. These two openings mark de facto the opening of our long-haul passenger traffic in November. Looking into Q3, it is really worth to note that our operating cash flow turned positive in the Q3 for the first time since the Q4 2019. This happened on the back of passenger numbers rising, especially in Europe, as stated, and then, you know, the forward-looking bookings increasing consistently through the quarter and especially from the start of September onwards. When we look at the pattern of demand, currently we see that it is very much focused on well-known European leisure destinations, so it's very much about leisure traffic. We have seen early steps in the business travel, but so far the business travel is especially focused on Nordics and Northern European destinations. During the quarter, we operated approximately 130 flights per day, still very far from the over 300 flights that we used to operate prior to the pandemic. Currently our flying crews amount to approximately 1,000 employees. We have been bringing back approximately 500 pilots and cabin crew from furloughs during the course of August and September. That development certainly will continue during the months to come during the winter. We also introduced during the quarter an affordable COVID testing service, and that partially supported the return of the traffic. We are normalizing our customer experience as we speak. We have been opening lounges. We have been introducing a new in-flight service concept in September, bringing more choice to our customers. We have restarted the in-flight sales that has been on pause during the pandemic, and our customer satisfaction still is high. NPS score in Q3 was 44. Skytrax once again selected us as the best airline in Northern Europe. At the same time, the ramp-up of traffic comes with certain challenges. For the time being, we are seeing those challenges, especially in the call centers, where the number of calls per passenger is threefold or even fourfold in comparison to what it used to be before the pandemic. Even though we have been adding resources in the call centers, the wait times for customers are not what we want them to be. This is something that we are addressing. We are on the case, but it will be taking a bit of time before we are back in normal course of business in this aspect of customer service. We have been also working together with Finavia and the health authorities to ensure a smoother entry for the fully vaccinated travelers at Helsinki Airport. There's a fast lane for the fully vaccinated, and thereby the customer experience on this aspect has greatly improved during the course of the quarter. Entering to Finland is easy, so fully vaccinated people can enter without tests, without quarantines, so it is notably easier than in some other countries in the world. Cargo enjoys an exceptionally strong business environment, and this is due to the relatively well-known-by-now global supply chain disruptions. It was a record quarter for cargo once again. During the quarter, we saw the air freight prices edging upwards despite the fact that more passenger flights were added to the global aviation system, and thereby the belly cargo capacity also increased on the market. Finnair Cargo has been doing very good job in terms of being very reliable and precise, fast, flexible in operations, and this is playing to our advantage. We have been able to capture the market opportunity that has been out there. We expect that this exceptionally strong demand will continue definitely for Q4 and most likely further into spring and even next summer. The volumes will be there for longer. There is, of course, volatility and some uncertainty related to prices and that remains to be seen how the prices developed during the course of first half of next year in the cargo space. When we look at the Q3 revenue, it landed at approximately EUR 200 million, being, you know, less than 25% of Q3 levels of 2019. At the same time, the revenue doubled from what it was in Q3 last year. If you look closely, you can see that our cost efficiency measures are visible in the P&L, despite the heavy losses. We have been proceeding in the realization of our cost savings program according to plan. By the end of the year, we have realized EUR 200 million of permanent cost savings as we have communicated previously. The comparable operating result for the quarter landed at minus EUR 109 million. Of course, a very heavy loss to bear for us at this point of time, but a step forward in terms of recovering from the pandemic if we compare the operating loss to previous pandemic quarters. Our operating cash flow, as stated, turned positive during the quarter for the first time since Q4 2019. That was especially on the back of a positive sales intake that is visible in the working capital change that turned to positive. The operating cash flow was EUR 27 million positive for the quarter. On top of that, we did a sizable sale and lease-back transaction for Airbus A350s, the biggest sale and lease-back transaction in the history of Finnair. With that, we raised EUR 400 million of fresh debt. At the end of the quarter, our cash funds stood at close to EUR 1.2 billion. On top of that, we have the undrawn hybrid loan of EUR 400 million, meaning that our cash reserves are strong at this point of time. The reason for us doing the sale and lease-back transaction was twofold. First of all, we got a good deal, the kind of deal that met all the criteria that we had for sale and lease-back transactions. Secondly, with the deal, we wanted to get ready well ahead of time for debt maturing in 2022. The loan and lease repayments in 2022 will amount to some EUR 600 million. With these cash reserves, with this turn in operating cash flow that we estimate to continue during Q4, we are well-prepared to meet those obligations during the course of the next year. On the back of the heavy losses and on the back of the prolonged pandemic, our equity ratio has been taking a hit, and we landed at 14% in terms of equity ratio at the end of the quarter. The gearing has been increasing. It's approximately 280% at this point of time. We need to remember that the EUR 400 million state hybrid indeed remains undrawn, and that will strengthen and stabilize the balance sheet. It is foreseeable that we will gradually draw on that hybrid loan in tranches during the months to come. The world indeed is opening for the fully vaccinated. Thailand and United States are opening now in November just in time for us to start also the Stockholm Arlanda operations for these two markets. We have now flown the very first flights from Stockholm Arlanda, and that is a noteworthy opening for Finnair in the midst of the pandemic, with us moving into a completely new market and taking advantage of changes in the competitive landscape in Stockholm Arlanda. We have now opened Bangkok, Phuket, and Miami from Stockholm Arlanda, and later in November and December, we will be opening New York as well as Los Angeles. These five long-haul destinations basically mean that we are matched with destinations. We are the biggest long-haul carrier in Stockholm Arlanda, so it is a noteworthy development also from the Arlanda perspective and from the Swedish aviation market perspective. We are now ramping up our capacity. We will be during the course of the winter flying approximately 65% of our capacity. A strong network in Europe. We are flying to New York, Chicago, Los Angeles, and Miami from Helsinki. We are doing daily flights to Tokyo, Seoul, Bangkok, and multiple weekly frequencies from Helsinki to Hong Kong, Osaka, and then Singapore. We are also ensuring good connections to Finnish Lapland to support the winter tourism. The outlook for winter tourism in Lapland is encouraging at this point of time. Still relatively early in the game, but encouraging as of now. We certainly see that Finland as a destination seems to be attractive for travelers post-pandemic. Asia opening will be slow, and then that will also mean that we estimate that our operating losses will continue during first half of 2022. When we look at Asia market by market, the opening of Thailand is noteworthy as stated. Also Singapore opening to some 10 countries with vaccinated travel lanes is noteworthy, although Finland is not part of those markets as of now. But we are in discussions to be opened later, and we understand that Singapore government plans to extend the list of vaccinated travel lanes during the next period. We also have taken note of Australia opening in November for international traffic. In Japan, the vaccination progress has been good lately, and now Japan is on the same levels of fully vaccinated people as many EU countries, and thereby by definition, they have the prerequisites for opening international travel. The new prime minister has communicated as his political priority the opening of the economy, and we expect that some movement will be happening in this space after the November elections in Japan. China, we estimate, won't be opening for international traffic basically during the first half of 2022. The opening will be happening from early second half onwards. Hong Kong most likely will be following suit with mainland China. In South Korea, the situation is somewhat similar to Japan. Good vaccination coverage has been increasing rapidly lately, and internally they are lifting many of the curbs from beginning of November onwards. We have taken note of Singapore opening a vaccinated travel lane with South Korea from fifteenth of November onwards. Not being part of the list here is India that is opening for scheduled commercial flights from fifteenth of November onwards. On the right-hand side of the picture, you have our sort of long-haul seats in 2019 to our long-haul markets, and that clearly indicates that Japan by far is the most important of our long-haul markets, followed by China. United States and Thailand are very important markets to us as well. Those 2,019 seats are of course excluding the Arlanda flights that we have just now started. That enables you to have a view of what is the importance of U.S., and Thailand as markets for us. We have been working on our strategy and we have been doing updates to our strategy, taking sort of more longer term perspective. We are ready to capture market growth and grow in line with the market. We want to position ourselves as a modern premium airline, bringing choice to our customers, changing retailing and distribution, increasing notably the share of direct distribution, which has already taken place during the course of the pandemic and it's very visible in our marketing efforts during the past couple of months. Now, during the next couple of months, we will be taking significant steps forward in this, in realizing this modern premium position. One step will be a landmark step that the new main terminal in Helsinki Airport will be opened on first of December by Finavia, the airport operator. That certainly will be part of the modern premium experience for our customers. Then we are also getting ready to launch early next year, the new Premium Economy cabin and new Premium Economy travel class, which is a big part of our modern premium positioning. The cost efficiency measures will continue. We aim for continuous improvement, further automation of our processes, and as stated, moving more toward digital distribution and direct distribution, which in turn will have an improving impact on our distribution costs. Sustainability definitely will be at the core of our strategy. These are some of the steps that we will be taking with our strategy, giving you a bit of flavor that what is happening on that space. We will come back to this in more detail during the course of the spring. We will publish also new financial targets once there is more visibility to Asian markets opening and us having a more granular view in terms of what will be the timing of the opening in those markets. Coming back to our outlook and guidance, despite the good business momentum in cargo, despite of us gradually having increasing numbers of passengers and thereby increasing revenue, we see that the Q4 operating loss will be of same magnitude than it was in Q3. The travel restrictions continue to take toll during Q4. Also the fact that we are increasing traffic means that there will be costs associated with that ramp up of capacity. Then certainly also the increasing price of jet fuel plays a role. There you need to remember that we are not hedged to the extent that we used to be before the pandemic. When we look into year 2022, we expect the operating losses, as stated, to continue during the first half, and then during the second half of 2022 from July onwards, we expect to be closer to the pre-pandemic operating environment while we still believe that the capacity measured by ASKs will return to pre-pandemic levels in 2023. I guess that is in a nutshell the Q3 of Finnair. As stated, it's good to see the traffic being restarted and it's good to see the passenger numbers basically being increasing by the day. Thank you. Thank you, Topi. Now would be a convenient time for questions you may have, so please go ahead. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad. Our first question comes from the line of Pasi Väisänen of Nordea. Please go ahead. Great, thanks. This is Pasi from Nordea. Well, to start with, this financing. I mean, you have that undrawn EUR 400 million hybrid loan still, and I guess it's going to be taken in late this year. Is it going to be executed or taken at full amount or only a part of that? And then, secondly, related to the sales leaseback deal you made, well, actually were these planes sold at the book value or were there any gains related to transaction? And, how much actually your lease expenses are then going to be up on quarterly basis? What is that amount and is it going to be booked to the interest expense item or row? Maybe lastly, regarding this kind of sale-leaseback, by looking at the future, do you still have a target or will to own your planes or have those in your own balance sheet? Should we expect that this leasing is the way forward? Thanks. Thank you, Pasi, and thank you for asking so many questions at one go. I try to remember. I start with the sale and leaseback potential. We still have unencumbered aircraft, but for now we have done the transactions. Never say never, but in the foreseeable future, we don't contemplate doing any additional transactions. That's due to the fact that we had, at the quarter end, almost EUR 1.2 billion of cash and then on top of that, guaranteed EUR 350 million of state hybrid loan. We don't disclose the cost of the transaction, i.e., we don't disclose how big the lease payments will be. However, we will split the leases to two components. As you know, those are treated as right-of-use assets and liabilities. There's the depreciation part for the asset side and then repayment and debt repayment and interest payment part, interest cost, for the liability part. It's treated as debt in the balance sheet. On the gain, there was a minuscule gain in the books, so one digit in millions, but I can't disclose more about that. I guess you can find it if you dig deep into the books. Nothing material. The hybrid. Hybrid loan? Hybrid loan in full. No, not in full. If there's a need, so we would most likely draw down EUR 50 million in the RCF. That's what Okay. Yeah. That's understood. We have agreed with the counterpart. Yes. Okay. All right. Just two quick comments on this one. First on related to the unencumbered aircraft. So, approximately one third, on roundabout terms, of our aircraft book value is unencumbered. And the aircraft book value is little bit more than EUR 1.9 billion. So, that's good to keep in mind and understand. And then secondly, as Mika rightly pointed out, of the hybrid loan, of the EUR 400 million hybrid loan, we have an EU Commission approval for EUR 350 million. And we are in the process, and we have been for some time, for the remaining 50. We are comfortable with the remaining 50 in terms of getting the permission, but the queues at the EU Commission are quite long. That has been impacting the timeline in terms of getting that permission. Okay. Great. Thanks. That's fully understood. If I may, still one question, lastly here, related to ticket pricing. I mean, do you have any comments or kind of a view for the pricing or for yields in terms of kind of how the demand and capacity balance in the air traffic in Europe or on a global basis has been going forward in the third quarter or maybe even on the fourth quarter? Thanks. I will comment only on Finnair's pricing now. Basically only about the H2. We are now in the mode where we are promoting traffic with low yields. Going forward, especially for November, that will continue since November is seasonally one of its weakest or second weakest month of the year. After November, we will gradually move towards more normal pricing. However, we might occasionally promote certain routes, destinations so that where we want to have a pickup in demand. We are gradually moving towards more traditional revenue management. You will see lower than typical yields from us. There's also the factor that we have, at the moment, less long-haul flying than typically, and that's one of the drivers there, because the long-haul yield might be four times, three and a half times as high as the short-haul yields. Hence the mix effect it plays the role. It will be tricky for you to analyze it, but unfortunately I can't give you more exact answers here. Oh, okay. I understand. I hear you. That was all from my side. Thanks. Our next question comes from the line of Jaakko Tyrväinen of SEB. Please go ahead. Yes. Good afternoon, gentlemen. Regarding the Q3, relatively good profitability and then the operating profit came in somewhat better than you indicated in touch with Q2 and what the analyst had expected. What were the most meaningful impacting factors to this improving profitability development that surprised you positively? Was it the volumes, yield or the cost level? Sorry, what was the last one? Volumes, yield or? Cost, the cost level. Cost level. Yeah. I think that many things contributed to that one. First one to note is cargo. Cargo had an exceptionally strong quarter, a record quarter. Then, I think that when you look close enough in Q3 result, despite the heavy operating loss, the cost savings measures that we have realized are visible in that result. Then, when we guided for Q3, the visibility to passenger revenue was sort of very fuzzy at that point of time because the customer booking behavior has been very late. Therefore, the volume of or the number of passengers was also something that sort of notched up our own expectations. Okay. Excellent. Thank you. A bit forward-looking. If we look at the, let's say, next six months, will you prefer kind of opening more routes and frequencies, although this might come with a still relatively low load factors? Or would you rather maximize profit, i.e., the load factors? Yeah, I think that this is a little bit twofold answer to this one. When we look at the European network, we have been now announcing our winter schedule, and we are happy with that winter schedule. In order for us to be able to increase the European flights, we would need to first see Asian markets to be open for travel and some of the transfer traffic to come back, which in turn would be reflected in European traffic. In European traffic, we will be very mindful of loads and profitability. In the long-haul traffic, we definitely will be mindful of the profitability as well, but there the picture is a bit more diverse. In those markets where we are opening or in those markets like U.S., and Thailand, which are opening for passenger traffic, we will be sort of utilizing normal business practices, so to speak. In some of the other markets, like Japan for the time being, China for the time being, Hong Kong, we will be very focused on being cash positive with our flights, but that cash positiveness is very much driven by cargo at this point of time. Cargo actually driving some of the scheduled flights will have a dampening impact on the average loads as well. Okay. That pretty much answers to my kind of follow-up here, which would have been that, are you seeing enough cargo demand in order to ramp up more capacity as you are planning to these new destinations, for example, Japan? Will there be enough cargo to have kind of a flight-specific gross-profit on those flights? Yes. We are very focused on following up the flight-specific gross profit so that we meet and exceed the variable cost of the flight. Cargo has been greatly helpful in that one. The sort of booking window for cargo is short, but we estimate that the business momentum in cargo business will continue to be very strong, at least during the Q4, but most likely also going into spring and even next summer. Okay, thanks. Lastly, could you give us any indications or reflections on the North American traveling and the early opening of Arlanda hub, meaning that you must have some visibility towards the booking curve there now? Yeah, during the past couple of weeks, we have been seeing a clear pickup in the U.S., bookings, both from Helsinki and from Arlanda. Now, when you know, the date of eighth of November was confirmed a bit more than a week ago, that sort of booking increase has accelerated. As late as yesterday evening, we got the sort of final specifications from U.S., government to the entry rules in the country. There are no surprises. Effectively, you need to take a pre-departure test, either a PCR test or antigen test as fully vaccinated, and then you can enter the country without quarantines. The specifications were according to our expectations, and we estimate that now when customers have full clarity on entry rules, that will further promote the bookings, both for Helsinki as well as for Arlanda, in terms of the U.S., flights. Okay. Excellent. Thank you. That's all from my side. Our next question comes from the line of Achal Kumar of HSBC. Please go ahead. Yeah. Hi, gentlemen. Thank you for taking my questions. I have a few questions. First of all, I think last time you mentioned that your cash flow should turn positive a month or two before your EBITDA turned positive, and now your cash flow has turned positive. Should we expect your EBITDA to turn positive in the next quarter? Mika here. You should read our guidance. What we are saying is that we expect cash flow to be positive and comparable EBIT being at the same magnitude as during Q3. That's unfortunately the only thing I can tell you. Okay. That means the situation has changed now, because your EBITDA was sort of slightly negative in the Q3, and then we expect EBITDA to be positive in Q4. I'm not saying. I mean, that broadly is. I'm not saying about the monthly level EBITDAs. I'm talking about the quarters here. Right. Yes. Okay. Perfect. The other question I wanted to understand about the competitive landscape, of course, now you've started base in Arlanda and which is of course the hub for Scandinavian. Now you're gonna start flights to other locations. So how do you see the competitive reaction from Scandinavian Airlines on that side? SAS and I think that their new CEO has been pretty clear about this in some media interviews. They are very much focusing on European short haul as part of their new strategy. Actually, our head-on competition with SAS from Stockholm Arlanda is little bit less than you would probably think because SAS is not flying to Bangkok, they are not flying to Phuket, they are not flying to Miami, they are not flying to Los Angeles from Arlanda. We are only head-on competing with SAS from Stockholm Arlanda when it comes to New York route as of now. As stated, we have read from the media interviews that they are not planning to introduce services, for example, to Bangkok. Right. Fair enough. The other thing I also wanted to understand about your cost savings. You have targeted EUR 200 million of cost savings. How much of those do you think would be sustainable even after the business go back to the normal levels? What is the progress as of now? Yeah. I mean, the EUR 200 million cost savings, the cost savings program, we have a very diligent follow-up on those cost savings, and those cost savings should be permanent in the sense that those costs should not come back. EUR 75 million of those costs are fixed cost savings. The remainder are variable unit cost savings, and thereby they move with the volume. The EUR 200 million euro sum is being calculated with 2019 volumes. Of course, the absolute amount of savings, for example, related to 22, will be dependent on the actual volume that we will be flying in 2019. That is the logic of our cost savings, and we maintain a strong discipline in order to avoid cost drift. Going forward, meaning that we want to safeguard that these EUR 200 million will be, as stated, permanent cost savings. Right. Fair enough. The other thing also, so you mentioned that you expect operating losses during the first half of next year. Any color, any guidance on sort of a quantum of those losses? I mean, are you expecting you know, significant improvement from this year? Or what sort of quantum are you expecting? What I want to emphasize there is that we are stating that during H1, i.e., both quarters are foreseen to be negative. Another thing I want to emphasize that we are still ramping up, and we expect Asia to be gradually opening in Q1 and Q2. Hence, Q1 will be deeper in losses than Q2. Yes. Q1 being seasonally, also weak. Yeah, yeah. Absolutely. The weakest quarter. Then as per the guidance, we are estimating that during the second half we will be closer to the pre-pandemic operating environment. I'm sure that you have noted also our guidance in terms of how we currently, with all the uncertainties that exist, see the possible opening and the timeline of possible opening related to China. Okay. Fine. Thank you. Last question from my side. You just now mentioned that the ticket pricing remains low. I mean, of course, you are trying to promote the traffic and then, and hence, playing with the lower traffic, so lower tariff, lower fares. In terms of yield, I mean, could you also give us a bit of a sense as to, you know, which side of the business. I mean, are you looking better yields in the European side? Or do you think the yields could look better on the North Atlantic routes? In terms of yield, I mean, if you could give us a bit of a sense as to which, where do you think yields will be normalized, normalizing faster and you know and then where the yields will remain sort of soft going ahead probably in the next six months? I think I answered quite a lot when Pasi asked about this. So it's a question of the opening up the traffic in Asia, because when we get the transfer traffic in place operating properly, then we can still truly start revenue management of our business. When we are in that situation, when we have during peak season, peak weeks, peak days over demand versus our capacity, then we will see a clear pickup in yields. We are not there with the exception of Christmas peak. We will hopefully see some nice yields. For a kind of extended period, seeing higher, nicer yields, it will take some time still. Okay, perfect. Thank you so much. Thank you. May I remind everyone that if you wish to ask a question, please press zero one on your telephone keypads. There are no further participants. We have a question now from the line of Andrew Lobbenberg of HSBC. Please go ahead. Oh, hi there. Apologies if you addressed this early in the presentation because I wasn't on for the very start of it. I'm just curious to see how you're thinking of the Arlanda venture with the long-haul flying. I mean, I totally see the logic, you know, given the delay in opening up of Asia. As and when Asia does reopen, do you think there are circumstances where you'll sustain operations out of Arlanda or is it definitely only temporary? How will you manage that? Then another question would just be, I think Ryanair are putting some capacity into Finland. How concerning is that? Then just the final one, and it's a very trivial one. You mentioned that there were some encouraging bookings into Lapland. I'm guessing that's Europe only, but just looking for clarification on that. Thanks. Okay. When we come to Arlanda, as stated, we have been seeing an opportunity in the market, with SAS focusing their long-haul operations to Copenhagen hub instead of Stockholm Arlanda, Norwegian basically in their debt restructuring process, you know, selling off the whole wide-body fleet and thereby not doing long-haul operations from Stockholm Arlanda either. That was the opportunity that we saw and decided to go for it. When we do that, we of course will be very focused on the profitability of that part of the business and profitability of those routes. We will be applying same standards that we are applying to any other route. Provided that these routes from Stockholm Arlanda will be profitable, we certainly stand ready to stay on the market for the long run. That is an active option for us, and we are working in earnest to make those routes profitable so that we can stay on the market over the longer run. When you look at our capacity, what you will need to remember is that we have three Airbus A350s coming up during the next couple of years. Our long-haul capacity will be increasing and therefore we see that it is possible for us to come back to pre-pandemic levels in terms of Helsinki long-haul network while still continuing to operate Arlanda. To the question of Ryanair, yes, they have been announcing that they will be flying a handful of routes to and from Helsinki. But they are not placing any aircraft to Helsinki, so they are not setting up a base, at least with current information. So far it has been relatively silent in terms of their operations to Helsinki. We of course are keenly observing in terms of how their plans unfold and what kind of steps will they take on this market. But as of now, there's not that much to report. The Lapland question. Mika, do you want to take that? Yeah, it's Europe. Domestic Finland and Europe. Makes sense. Thanks. And thank you for the clarity on Stockholm. That is all, you know, perfectly sensible. Sounds very sensible. Thank you. Thank you, Andrew. There are no further questions at this time. Please go ahead, speakers. Yes, thanks for joining the call, and we would like to wish you a great day. Thank you very much. Thank you. Bye-bye.