Translation: Original published in Finnish on 07/20/2026 at 10:01 pm EEST

Source: Inderes & Modular Finance, 5 estimates (consensus)

Finnair publishes its Q2 results on Wednesday at 9:00 am EEST. We have raised our Q2 estimates due to stronger traffic data than we expected. We estimate that the operational result improved significantly from the comparison period and rose to an excellent level due to high revenue. After a very strong start to the year, we consider an upgrade to the revenue guidance possible and expect the company to at least narrow its wide earnings guidance range by raising the lower end. In our view, the share price already reflects the earnings improvement in line with our estimates, which is why the expected return in our models remains below the required return on a one-year horizon. As a result, we make no changes to our view on Finnair before the Q2 report

Traffic data again indicates strong growth

Finnair's traffic data in Q2 and also in June was stronger than we expected, supported by the brisk growth in passenger volumes. In the comparison period, Finnair was also burdened by extensive industrial actions. This development was partly supported by strong demand in Asian traffic, which we estimate was positively impacted in Q2 by the tight situation in the Middle East through a contraction in market capacity. Development in Europe has also been brisk, while demand in North America was mixed. Pricing also strengthened unusually strongly, as the unit revenue increased by around 15% in Q2. We estimate that the dynamics of ancillary services sales followed passenger traffic during the quarter, while we expect more moderate development in freight and travel services revenue Finnair's traffic data anticipates that the sum of these factors led to a Q2 revenue increase of around 17% to 920 MEUR, to which we also raised our estimate (+4%).

We expect excellent earnings despite cost pressures

Due to strong revenue development, we have raised Finnair's Q2 adjusted EBIT estimate by a good 25%. We now expect adjusted EBITDA to improve to 81 MEUR in Q2, which is slightly below consensus. On the lower lines, we believe financing costs will be slightly higher than in recent quarters, but expect the tax rate to have remained stable at 20%. Thus, we estimate that EPS was EUR 0.25 in the quarter. In terms of cash flow, Q2 was likely quite good for Finnair, as tickets for the Q3 peak season were also sold during the quarter, which in turn supported the company's cash flow through working capital.

A strong start to the year creates pressure for a guidance revision

Finnair guidance for 2026 is capacity growth of around 3%, revenue of 3.3–3.4 BEUR, and an adjusted EBIT of 120–190 MEUR. We have made slight negative revisions to our cost estimates, especially regarding fuel costs, due to the prolonged crisis in the Middle East. We now estimate Finnair's capacity to grow by about 3% this year and revenue by about 11% to 3,450 MEUR, which is above the guidance range. In terms of EBIT, our estimate (2026e: adj. EBIT 199 MEUR) is slightly above the guidance range. We consider an upgrade to the revenue guidance possible, but cost pressures and geopolitical uncertainty still warrant some caution from the company. Thus, we expect Finnair to mainly narrow its wide earnings guidance by raising the lower end of the range.

A fairly good scenario is already baked into the price

Based on our estimates, Finnair's P/E ratios for 2026 and 2027 are approximately 9x and 10x, and adjusted EV/EBIT multiples are around 9x. Thus, the stock trades above or at the upper end of our acceptable ranges (adj. P/E: 6x-9x adj. EV/EBIT: 6x-9x) . Nor does the valuation offer support on a balance sheet basis (2026e P/B:  1.4x), as this level would necessitate a return on equity clearly higher than the required return over time, for which Finnair's track record is still limited. The share is also valued at a clear premium compared to its European core peers, and the DCF model does not support the current share price. Thus, Finnair's expected return for the year remains unsatisfactory in our view.