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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 Fourth Quarter and Full Year 2021 Earnings Call. I have here with me Finnair's CEO, Mr. Topi Manner, and we're 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 good day, everybody. Welcome to this Q4 earnings call. So the main headline for Finnair Q4 is that our travel increased, the recovery progressed and EBITDA turned positive for the first time since Q4 2019.Omicron, obviously, was a phenomenon related to Q4. And during Q1, it will be having a notable negative impact. But based on our booking development, we see that the impact will be short term.So moving on in the presentation, I think that the -- one of the clear observations related to Q4 was that it was a clear indication of strong pent-up demand on the travel market. Even in the midst of very high uncertainty in December, customers kept their holiday travel plans, and that was visible in our passenger numbers during the Christmas period.The volumes during the quarter increased according to our expectations. Passenger numbers grew from 1 month to the other. We flew on average 200 flights per day, including the cargo-only flights. And of course, the quarter was important for us in a sense that in November, our long-haul operations started for real, when United States and Thailand opened for traffic early in November and a little bit later, Singapore and India followed suit, and then those markets have been operating ever since.During the quarter, we also started direct flights from Thailand -- from Stockholm, Arlanda to Thailand and United States. And those flights have been pretty much working according to our expectations. And we have had even some positive surprises like cargo demand from Arlanda.Omicron impact suddenly started to be visible in December and the travel restrictions were reintroduced, and that suddenly impacted some of our operations. At the end of the year, we reached our target of EUR 200 million of permanent cost savings. Those cost savings are already visible in our full year results for '21, and the full run rate impact of these savings will be visible for the entirety of this year and going forward. But we remind that these savings are partially fixed cost savings and partially viable cost savings. So related to the volume that we are operating at any given point of time. As stated, Omicron post challenges to our operations, especially at the turn of the year. Our Net Promoter Score was 29%, so still on a good level, but a little bit below than it has traditionally been for us. Traditionally, it has been around 40 points or even above. We, as so many other airlines out there, including the whole aviation value chain, experienced a lot of employee sick leaves. The mentioned quick changes in travel restrictions definitely had an impact, and there was quite a bit of congestion in our customer service channels because, for example, the call center volumes were 4x as much per passenger as they used to be before the pandemic. We have now taken determined measures to solve these operational issues, and they are taking positive impact as we speak and they have already taken positive impact. We've already, for example, shaved off some 20% of our February traffic program while keeping the staffing levels, so effectively creating a buffer for the sick leaves. We have taken a range of measures to improve the situation in our call centers. One of them was that we got 50 new agents from draining to join our ranks. We have also accelerated the development of our self-service channels by recruiting more coders.The whole year of '21 was very strong for cargo, and Q4 was the crown of the year. We achieved record high revenue on a quarterly basis by a mile in comparison to previous record quarters. During the quarter, the Cargo revenue was 1/3 of our total revenue. And during the full year, it was 40% of our total revenue. The average cargo yield still is almost 2.5x the level that we experienced before the pandemic. So this is a very profitable operation. We estimate that the strong demand in cargo will continue throughout the first half of this year, although it is worthwhile to note that Q1 is always seasonally weaker compared to Q4 in the cargo business. So looking at the Q4 results, it is still heavily negative, but our revenue doubled and more than doubled from the previous quarter. Comparable EBITDA, as stated, was positive for the first time since Q4 2019. And the comparable operating result landed at minus EUR 65 million. So we managed to decrease the operating loss during the quarter.When comparing to Q4 2020 and especially when comparing the lines below comparable operating result, we will need to remember that in Q4 '20, we had a one-off booking from -- that was related to the changes in the terms and conditions of our pension fund, and that is very visible in the numbers.So even though our revenue for the quarter was 4x as much than year before and doubled from the previous quarter, of course, it's still worthwhile to note that it was only a bit more than half than we used to have before the pandemic. So we took steps forward in terms of recovery. We are on our way, but there's still a way to go in order for us to reach profitability.In terms of full year, the revenue plus the other operating income landed at almost exactly on the same level as it was during year '20. Nevertheless, the comparable EBITDA and the comparable operating result was clearly smaller than during year '20, and that is all accountable to the cost savings program that we have been completing. And that cost savings program of permanent cost savings, i.e., resetting the cost base of Finnair really plays a pivotal role in us getting back to profitability as soon as possible.So the comparable operating result for the year was minus EUR 469 million, a heavy loss to bear. When we put all of these 2 -- both of these 2 years together, then we see that, on comparable operating result level, the pandemic toll already is in excess of EUR 1 billion. And as we are guiding, the whole first half of this year will be also generating an operating loss. So the full pandemic invoice, if you will, will still continue to accumulate.Nevertheless, our cash reserves are strong. So we started the Q4 with EUR 1.2 billion roughly on our cash funds, and the operating cash flow was EUR 125 million positive with EBITDA and especially changes in the working capital due to the positive sales intake. At the end of the year, the cash reserves amounted to EUR 1.27 billion. On top of that, we have the EUR 400 million hybrid loan, which remains undrawn as we speak. We had earlier received an EU approval for EUR 350 million of that. And now today, we communicated the approval for the remaining EUR 50 million. So all of that EUR 400 million now is EU approved and thus remains in full in our disposal.Equity ratio took a hit on the back of the operating loss. The equity ratio now is 11.8% and the gearing is 321.8%. But the mentioned EUR 400 million hybrid loan will strengthen the balance sheet, and we will be drawing on that one as needed going forward.So on the back of the Omicron variant, the operating environment remains unpredictable. But having said that, it is also important to note that we do believe that on the back of Omicron, we are gradually moving out from the pandemic and moving into an endemic phase. So in that sense, Omicron just might be a blessing in disguise, and things are increasingly looking that it indeed is a blessing in disguise. And especially in Europe, in North America and in those Asian markets that are open, we will be quicker back to more normal operations after the Omicron variant. Currently, in Asia, India, Singapore, Thailand are open. We estimate that on the back of Omicron countries, like Japan and South Korea, will gradually open towards the end of Q2. Both of these countries are experiencing an Omicron wave as we speak, and that wave is something like 6 weeks behind Europe in those 2 countries.For China and Hong Kong, there is prolonged uncertainty in terms of opening. And this is very much related to the zero-COVID policy that both of these countries are committed to. In Hong Kong, we take note of the fact that there is a clear Omicron outbreak as we speak, and it will be interesting to see how things unfold in terms of restrictions on that market. Some recent developments on the map. and in terms of travel restrictions are related to Australia. So Australia opening for tourism for the fully vaccinated starting from 21st of February. The situation on our employee relations front has developed positively recently. We -- as late as yesterday, we formed a 2-year CLA agreement with our cabin crew. A year ago, we made a very long-term new CLA contracts for 3.5 years with our pilots, and there's still 2.5 years remaining of that contract.Also on the office worker side, there are developments going forward. And then we have now a negotiation result of a 3-year CLA. So these new agreements enable some structural change and renewal in the contracts, and they also provide stability and work base, if you will, for us to focus on the most important thing, namely ramping up our traffic, taking good care of our customers and thereby coming back to profitability. And yes, we are preparing for the summer season as we speak. We will have a strong network in Europe and in United States. So while we are waiting for some Asian countries to open, we are partially pivoting to North America and introducing new destinations in our network. For example, we are introducing a new route to Dallas, which is the home hub of our Oneworld partner, American Airlines. We are also introducing a new route to Seattle, a 3 weekly frequency to Seattle, which is the home hub of Alaskan Airlines, another of our North American Oneworld partners.Later during the summer, and the date remains to be specified, we will be opening a route to Busan to South Korea, and the same applies to Tokyo Haneda Airport. Both of these are very exciting new routes and then important parts of our Asia network. And as we ramp up our flights, we are gradually calling people back from furloughs. And all of our capping crew has now been caught back to the flight eligibility trainings that -- to logics that have already taken place, and some of them are still taking place during Q1.Last week, we announced our EUR 200 million investment to new elevated long-haul experience. This is an investment that has been long in the making. It started 4 years ago, and this is a major step in positioning Finnair as a modern premium airline. So what we are doing here is that we are introducing a completely new travel class premium economy with new seats, which offers more space and comfort to our customers and purpose-built service concepts for premium economy customers. So this is a completely separate cap and separated by walls from business class and economy. We have also completely rethought the way we are serving customers in the business class. And at the core of this is a new business class seat called the AirLounge. There's more privacy, more space for our customers, more comfort. The really sort of crown-breaking feature and forward-leaning feature in this seat is that the seat does not recline. And part of that is -- a consequence of that is that the seat is lighter. So there is an impact in terms of fuel efficiency, in terms of CO2 efficiency. You can get comfortable in the seat with extra pillows and modifying your seat position. And then when you put the leg rest up, then you get a full horizontal bed, which with mattresses and extra duvets translates into a very, very good sleeping experience that brings the customer experience to a completely new level. And on top of all of this, we are also renewing and refreshing our economy class with new seats and the new in-flight entertainment system. So as stated, we are positioning ourselves as a modern premium airline. And to us, modern premium is different from the premium of the past. Modern premium is about focusing on the essential. It is about being authentic, in our case, authentically Finnair, authentically Nordic with the design. It is about offering customers choice, and it is about being sustainable. And all of these elements are very visible in the concept development. And the international press has welcomed really this launch. And I think that we have excited feedback, very positive feedback from the travel journalists, especially and for the traveling public in general. So I think that in order for you to get a little bit better understanding that what we have created and what we are launching to the customers, let's quickly look at a video that will sort of give you a better flavor.[Presentation]
So we are certainly very proud of it. We think that this looks good. And we already have some of these aircraft in our Helsinki hub. The first one has flown last weekend. We will be implementing this renewal across our long-haul fleet, so across our Airbus 350s and Airbus 330s. And it will be a relatively fast rollout, so by the end of '23 when Finnair has its 100th anniversary where we hope to have all of our widebodies refurbished with these new cabins. The sales will start on the 1st of March. And until that time, there are surprise upgrades for our customers.So the business case in this one is that with premium economy, we are tapping into the premium leisure demand that we see increasing as a trend. And we think that this trend has only been accelerated by the pandemic. In the grand scheme of things, we are a niche airline connecting Europe and Asia and providing good connections also to North America. And we want to differentiate with quality. We want to take good care of our loyal customers so that they come for repeat business, but we also want to attract completely new customers. And we do believe that with this customer experience, it is very possible because we clearly are very competitive on the marketplace after the pandemic. So to wrap up, coming back to our guidance. As stated, currently, in Asia, Thailand, Singapore and India are open. We see this prolonged uncertainty in China and Hong Kong due to the zero-COVID policy commitment. And we see that the rest of the Asian market will be gradually opening toward the end of Q2, while North America and Europe have already lifted largely the travel restrictions and are open for traffic.We estimate that Q1 operating loss will land on the same level. It will be of similar magnitude than the operating loss one was in Q1 '21, when it was minus EUR 143 million. And when we compare to Q4, the reasons behind the development are related to Omicron, so the notable but short-lived Omicron dip in terms of revenue. There's also some additional costs. For example, due to sick leaves coming out of Omicron and then certainly, the increased fuel price and also the costs that are related for us to be fit for the summer related to ramping up the capacity for summer play a role behind the Q1 development. But we also foresee that Q2 will be clearly better, but we repeat the earlier guidance that it will also be still loss-making. And then during the second half of this year, we estimate that we will be closer to normal operating environment, excluding China and Hong Kong with the prolonged uncertainty. So thank you. I will stop at that and hand back to you, Erkka.
Thank you, Topi. And now would be a perfect time for any questions you may have. So you can present them by following the operator's instructions.
[Operator Instructions] Our next question comes from Joonas Ilvonen with Evli.
It's Joonas from Evli. Can you hear me?
Yes, we can.
Yes. So a quick question on the inflationary environment. I mean, when it comes to your cost savings program, you have planned this mostly in 2020 and early 2021. Do you see any particular cost line items or assumptions that inflation might challenge going forward of fuel obviously?
Of course. I mean, fuel is obvious. But I mean, if we put fuel aside and look at the other cost items first, then the salary increases that we have agreed with our employees and crew are very moderate. So if we take the pilot agreement that is -- was formed 1 year ago and still runs for 2.5 years, that's effectively flat salary development for the period. And now the agreement with the cabin crew that was formed as late as yesterday was that there will be zero salary increases for this year, and then there will be so-called general level increase of the Finnish job market for the next year. So that general level increase most likely will be following the inflation for that year. That is more or less the sort of customer redevelopment on the Finnish market.So I think that the job contracts and the CLAs that we currently have in place clearly is the inflationary pressure in our particular case, and they will be having a beneficial impact on our CASK.Then the cost savings program, EUR 200 million of permanent cost savings, certainly plays a role in that one. Even though we delivered at the turn of the year the cost savings program, we are definitely not idle in terms of cost savings as we speak. So we continue the continuous improvement measures in terms of cost efficiency to basically eliminate the impact of inflation.Then as you rightly pointed out, oil price increase and jet fuel price increase suddenly plays a role in that one and that we are experiencing currently. We are hedging something like 10% of our fuel consumption at this point of time. So we are more exposed than we would be normally. And there is a clear need in order for us to reflect the increased fuel bill in our pricing of lights.And what is good to note is that when we look at the yields of our tickets during the past months, they have been pretty much on the same level as they were before the pandemic, a little bit depending on the competitive situation on a given route. And there seems to be a rather rational approach by airlines to pricing tickets, which is logical in a sense that airlines have been accumulating a lot of losses, and the losses will need to be covered by profitability going forward. And then, therefore, this rational approach, of course, is welcome. We see that there's pressure to increase prices on the back of the fuel cost going forward.
All right, that's clear enough. And maybe one another question related to this topic. I mean, obviously, all airlines are targeting major cost reductions. Of course, they are successful in that. But how would you -- I mean, this is a bit more complex question maybe. But considering Finnair's long-haul focused relative to maybe more short-haul focused airlines, would that somehow maybe make you more able to realize these cost reductions, I mean, compared to certain amount of volume? Obviously, you asked somewhat smallest airline compared to certain other players. But I don't know, could you be able to somehow discuss this logic that could -- the long-haul focus somehow make you more or less able to realize cost reductions relative to -- I mean, it's a bit -- I'm not sure if it's possible to answer in any constant clear way.
Mika can continue in a minute. But perhaps I will start more from the sort of competitive angle and from the pricing angle in this one. So yes, long haul plays a big role in our operations, and long haul recovers with the delay in comparison to short haul. And then that is, I guess, a well-known fact related to aviation. So of course, the delay in recovery, we would hope that to be quicker. But on the good side of that is that when we look at both the short-term and the medium-term competitive landscape in the long-haul part of the business, we think that, that will be more moderate than in the short-haul part of the business. If you look at, for example, the capacity reductions in the long-haul space during the pandemic, many airlines have been reducing their widebody capacity, retiring old aircraft. And there are not that many new orders in the pipeline globally. So over the medium term, there might be sort of a more favorable balance between demand and supply in the long-haul space. And that would be giving, of course, some pricing possibilities for us, especially when we have now a completely renewed customer experience that is really front running on the industry.
Yes. Mika here. We haven't thought about when we have conducted our savings program that the long-haul, short-haul view at all. And I have difficulties to understand that how could this affect in general, the possibility to save because we have saved from the fixed cost side quite a lot. We have less -- way less office space, for instance. We have changed processes in several areas. We have conducted kind of quite sizable process changes in certain ground-handling areas, many changes in the tech ops and so on and so forth. And then naturally, there were this unfortunate headcount cuts. So I have to be frank, I have difficulties to distinct between short haul and long haul in the savings program.
Yes. And that, of course, we are a network airline and therefore that network logic basically very much relates to our savings program as well, so including both short haul and long haul. But what needs to be stated is that if we look at long haul, isolated our CASK in comparison to competing airlines from Europe and competing airlines from Asia to our understanding, is very competitive. And then that has applied to the sort of aircraft utilization costs, especially with the 24-hour rotation between Europe and Asia. And it certainly has applied also to the crew unit cost.And yet again, I come back to the CLA agreements with the crew. So being able to have flat development in terms of salary cost, having some structural renewal in terms of flexibility of the crew usage should actually improve our position a bit in the relative game in terms of CASK for the long haul.
[Operator Instructions] Our next question comes from a participant with number +44-603-2775.
Am I audible? Can you hear me?
Yes. Yes, we can.
Perfect. First of all, I'm sorry, I actually missed the first part of your responses. So kindly excuse me in case that there is a bit of a repetition. I'm sincerely sorry for that, apologies. But my first question is about your agreement with the [ AAKD ] Union. So basically you've been the next [indiscernible], and they've been asking for the possible -- if there is a risk of possible strike. So how do you think -- what will happen? I mean what is your expectation? Of course, you've been sort of discussing that possibility of an agreement. But where are we on that? And if that results in a strike, would you be able to -- or rather, would your cargo volumes will also impact because you are carrying so much of cargo in the belly space? So that's my first question, if you could please talk.
So to focus, if I understood your correct -- question correctly, it was about whether we have the strike risk. And...
Exactly. Exactly.
And there is...
How would that impact your passenger and cargo?
Yes. So that concern, we can tick out from the list. So we don't have that concern. The CLA agreement that we reached yesterday with the cabin crew basically means that the strike is off and we continue to do our normal course of business. And the cabin crew CLA was the last one of the CLAs that was outstanding. So now having the cabin crews CLA under our belt means that we have a clear possibility to focus on ramping up our flights to take care of our customers and to come back to profitability. So it is really a good thing to have.
Right. Sorry, I know you responded to this question. But quickly, if you could again talk about -- and I'm assuming -- sorry, again, you know that -- how -- what is the risk to your sustainable EUR 200 million cost saves from the higher inflation? Because inflation is high -- very high in Europe. So what sort of risk do you see to that -- to your sustainable cost saves, especially, I mean, of course, the few reason, I mean, as you rightly said, that's where I heard that the fuel is one? But then to your salary and to the other costs, what sort of risk do you see?
Yes. If we put the fuel aside because we largely addressed that already. So the EUR 200 million savings, they are permanent cost savings. Part of it is related to fixed cost and part of it is related to variable cost. So when taking those measures, we have been taking inflation into consideration. And the CLAs that we have now in place effectively mean flat salary development for next 1 or 2 years in the company. So that will be easing the inflationary pressure significantly in Finnair.Then when we look at the rest of the cost items from our various providers on the maintenance side, original equipment manufacturers, so on and so forth, there is inflationary pressure there. And also the airport charges are the case in point. So unfortunately, there seems to be inflationary pressure in the airport charges. We all know the examples of Heathrow, Schiphol and so forth. The good news is that in our home hub of Helsinki, the pressure is clearly lower than in many of the other European hubs. So the fact that our airport charges are very much, of course, focused to Helsinki hub, then that might actually slightly improve our position in the relative game.
Right. Perfect. Also, it would be very helpful if you could please discuss the competitive landscape in your different markets within Europe and on the North Atlantic operations. I remember last time we spoke that, of course, you said the competition is everywhere and especially when you're entering Scandinavian Airlines, of course, there's competition. And then Ryanair is deploying capacity in Helsinki. So it would be helpful if you could please talk about a bit of a competitive landscape within Europe and on the North Atlantic operation, please?
Yes. So if I start from our home hub. So our home hub of Helsinki, our market share has not only stayed the same as it was before the pandemic, but it has also ever so slightly improved from already high levels. So this is a clear indication that when it comes to traffic to and from Helsinki, we are competitive at this point of time. Of course, the demand still being subdued. We have been seeing developments in the competitive landscape. There are players like Norwegian who have been reducing their fleet and who have clearly smaller footprint now than they used to have in the routes relevant to us. We have had some new competitors coming in, like Ryanair, not establishing a base in Helsinki, but introducing some routes to Helsinki.During the time when Ryanair has been in the Helsinki market, our market share has been stable or improving. So it goes to show that Ryanair taps into different customer pool. They are especially serving their origin markets from Europe and U.K., that kind of a customer, customer pool. And our yields have been stable during this time.In the Atlantic traffic, during the summer most likely, we will be seeing quite many airlines deploying capacity to the Atlantic traffic. But it is very important to note that at the same time, we see a lot of demand on the Atlantic market. And it comes from a point of commencement U.S. so that there's a lot of demand during the summertime to travel from U.S. to Finland to the Nordics and to Europe and also vice versa. So we think that the Atlantic demand will be strong. And then, of course, time will tell that what will be the balance in terms of demand and supply on that market. But so far, I think that it seems reasonable. So that's what we experienced. On those markets that are open now in Asia, Thailand, India, Singapore, we see that the traffic is coming back, and then there's rational pricing behavior, rational competitive behavior on those airlines who are operating the routes. Mika, do you want to add something?
No, not really. That was it. Yes.
Okay. Sorry, I have 2 final questions. One, I wanted to understand about your plans for summer capacity. I mean, of course, you mentioned that you will -- you plan to increase capacity significantly. How that ties up with your expectations in terms of demand? Have you got some indication or some advanced bookings indicating the kind of demand? Or is it too early?And secondly, of course, when you talk about the summer capacity, are you sort of -- are you planning to consolidate your position on the existing routes? Or are you planning to add new routes? And in both the cases, what sort of impact do you expect on the yield? So that is my first question.And then secondly, you talked about spending EUR 200 million to improve the flight experience, especially on the premium side, premium economy and all. And you said because -- so this pandemic has actually accelerated that premium demand. So have you -- I mean, do you have some kind of data or some kind of survey or some kind of analysis to share? Because generally, if I see, I mean, globally, of course, we can see that the trend is that the demand is clearly dominated by the leisure traffic, which is sort of probably the price-sensitive traffic, and the copper is also not recovering. So what -- although, of course, you share the logic. But do you have kind of solid evidence or something like that which makes you to spend this EUR 200 million?
Mika, if you start on the first one.
Yes. What we can see, especially in long haul, that there is clear demand already now for the summer months. So there's kind of a bump, a positive bump in the bookings for those summer months. And I think that's quite good considering how early we are the booking curve. So that's clearly a positive sign. And this is for some markets where we don't have the final opening of the market.
Yes. That stated -- what we are also saying in the report is that the Omicron impact in revenues will be notable, but it is short-lived. And this is, of course, based the statement on what we see on the booking curve. So the Omicron slump in the bookings was something like 7, 8 weeks. And now for several weeks, the bookings have already increased, and therefore, we are optimistic about the summer.So then to your second point in terms of what kind of customer insight and data we have to the investment of the EUR 200 million. So as stated with the premium economy, we are tapping into the increasing trend that we see on the premium leisure travel, and we do think that this trend has only been accelerated by the pandemic. Then part of our positioning as a modern premium airline is also to offer customers more choice. So for example, for the business class, there would be 2 notable developments in that one. First of all, we think that in business class, especially the long-haul corporate travel, will recover. And simply because, I mean, the longer you go from home, the more you need to go and see your customers face to face. The more you need to go and see your own people face-to-face, the more you need to go and see that what is really going on, on the markets to understand that what are the trends, what are the opportunities, what are the threats, and there's also the control aspect of your operations and investments on those markets. And it's very hard to handle those things via Teams or Zoom. So long haul -- as long haul travel recovers, we think that business travel will have a big part of that. There will be also an element of the premium leisure demand being directed to business class, and that is why, for example, the choice element that we are bringing to our business class is that we are offering a business class light ticket. So there's a possibility to choose the normal business class ticket all included. And then the light ticket is effectively the seat and the food and beverages onboard, but no priority boarding, no lounge access and things like that.And there is a premium leisure audience out there who, for example, wants to take the night flight to -- from Helsinki to Singapore and pay for the business class like ticket so that they can arrive well rested to the destination. But onboard, they only want to sleep and they want the breakfast. So therefore, this stripped down offering might be very good for them.So this is part of the thinking that we have in the business class. So we think that, yes, there will be corporate travel, but there is also an increasing sort of premium leisure audience for the business class, not only premium economy.
Perfect. And sorry, I forgot to introduce because I was introduced with the numbers. So this is Achal from HSBC. And kindly excuse my mistakes. Unfortunately, I'm COVID positive. So just a bit of struggling there. And good luck.
Thank you. And I hope you recover soon. We all have had that. I had mine a couple of weeks back and still have this mild cough related to that. So we are all in the same boat.
Our next question comes from Pasi Väisänen with Nordea.
Great. This is Pasi Väisänen from Nordea. I just actually read the strategy update part from your report. Could you actually please tell something a bit more regarding the strategy update? Because I guess the ACF, of course, will stay in any case, but there were no mentioning about the ACR anymore on your kind of strategic part here. And would it be also so that you are now actually making a shift from the business traveling model to a laser business model when looking at the coming years? And where did the some other changes probably not related to mid-term kind of horizon planning period?And maybe lastly, regarding the strategy and the financial targets. So do you still believe that this soon over 7.5% EBIT margin actually would be a realistic approach going forward?
Yes. In terms of the strategy, so to start with, we are fully committed to our strategy of connecting Europe and Asia via the short Northern route via our Helsinki hub. So there's no change in that. We think that, eventually, Asia will open, including China. And then we are well positioned to capture on that growing market. While we are waiting for Asian traffic to open, we are increasing the weight of North America in our network and that we are doing, for example, by introducing new routes to Dallas and Seattle from our Helsinki hub and also by introducing flights from Stockholm, Arlanda to North America. So pivoting to North America is something that sort of balances our network on one hand and then tactically offers opportunities while we are waiting for markets like China to open.And what is important to say is that when we look at Asia, Asia is many, many countries, we need to look at Asia country by country. And Finnair can be profitable without Chinese market. So Finnair can be profitable without China. And even though, currently, the travel -- China is very restricted, we still need to remember that we are earning revenue from the Chinese market. We have 1 weekly flight to Shanghai that is simply enabled by the Chinese policy for all airlines internationally. And that flight is very, very profitable due to the very sort of reduced capacity. And then we are also earning from cargo in the Chinese market, and that's a very good business because the cargo yields are high. So even though China is very restricted right now, that does not mean that there wouldn't be revenue out of that market.And then if we come back to the business model and consider business and leisure. Before the pandemic, business corporate travel accounted to something like 20% of our number of passengers and 30% of our revenue. So we have been clearly a leisure carrier. And going forward, as I mentioned, we see 3 important customer segments: the corporate travelers and the premium leisure travelers and the sort of traditional leisure travelers, including individual travelers and groups. And what we see is that this premium leisure demand will be the key mitigation to potentially a little bit lower corporate travel demand that will be especially related to the short-haul routes, much of them regional routes within Nordics.
Okay. Great. But just coming back to this in North America issue. So -- but kind of -- is there any competitive edge for Finnair in this North America connections. I do understand that you have a distant kind of -- so distance to kind of Tokyo and northern part of Asia, but from where you are going to get the travelers from this Helsinki and North America connection.
Yes, I think that there are 2 things worthwhile to mention on that one. First of all, our Oneworld alliance is very strong in North America. So American Airlines, of course, is the biggest airline in the world and super strong in U.S. And then also Alaskan Airlines, one of the big ones, big 5 airlines in U.S., recently joined Oneworld. So American Airlines and Alaskan Airlines together have a huge customer base and huge network in U.S., and they have huge distribution power on that point of commencement. So that clearly is a strong benefit for us.And therefore, when you look at our North American traffic, mindset-wise, you should not look at it as us serving only our sort of Nordic home market and Europe in terms of outbound travel from Nordics and Europe to U.S. You should be looking at it also as inbound travel from U.S. to Nordics and Europe. And the inbound actually might be even more important than the outbound.Then network-wise, when we look at our catchment to North American flights, Finland and the Nordics and the Baltics, of course, will be important. The same applies to Russia and Eastern European countries. So from places like Berlin, it makes sense to fly from Berlin to Helsinki and then over to Chicago, then over to Seattle and so forth. So in order for us to provide feed to our North American flights, we will -- we are reviewing also our destinations in Europe in order to cater for that traffic.
Yes. I was just looking at our data of 2019 here. So actually, more than half of the Atlantic travel is outside between Finland and U.S. So we have some other combinations like from U.S. to Latvia or German to U.S. and so on and so forth. So it's the same network model works there as well as what we are executing in Europe Asia.
At this time, we have no further questions. I will now hand back to the speakers for a final remark.
Okay. Thank you. If there are no further questions, it concludes our session. So thank you all for the excellent questions and joining the call. We wish you a great day.
Thank you very much.
Thank you.
Bye-bye.