Translation: Original published in Finnish on 10/14/2026 at 8:00 am EEST.

Finnair provided preliminary Q3 earnings information and raised its 2026 guidance, both of which were close to our previous expectations. Forecast changes were therefore minimal. We still predict a clear decrease in next year's earnings, relative to which the share valuation is high (e.g., 2027 adj. P/E 12x). We reiterate our Sell recommendation and EUR 3.8 target price. 

Q3 earnings and guidance upgrade largely in line with expectations

Yesterday, Finnair released preliminary Q3 figures and raised its full-year guidance. Q3 revenue was 953 MEUR and adj. EBIT was 84 MEUR, both of which were quite close to our estimates (955 MEUR and 87 MEUR). The full-year guidance was raised for both revenue and earnings. Finnair now expects revenue to be 3.5–3.6 BEUR and adjusted EBIT to be 175-220 MEUR. For Q4, the earnings guidance still leaves an extremely wide range of 13–58 MEUR, with the midpoint at 36 MEUR. In any case, the guidance implies a year-on-year decline in Q4 earnings from the comparison period’s 62 MEUR.

The company commented that demand continued stronger than anticipated, even though increased fuel costs have been partially passed on to prices. While strong demand is a positive development, the company also notes that it has not been able to fully pass on higher fuel prices to its prices, at least for now. At the end of Q2, Finnair had hedged 70% of its fuel for Q4, so higher fuel prices will have a limited but noticeable impact. Our full-year forecasts were already in line with the upgraded guidance, which is why our full-year estimates saw only marginal changes, and no significant changes were made for the coming years either. Our 2026 earnings estimate is now practically at the midpoint of the new guidance range. 

We expect earnings to decrease next year

Although Finnair will only provide its 2027 guidance in February, in connection with its Q4 results, the company commented in its press release that increasing fuel hedging is currently difficult and also highlighted other uncertainties. As of the end of Q2, Finnair had hedged approximately one-third of its fuel purchases for 2027, and unless it implements additional hedges during H2, it will be much more exposed to market fuel prices next year than in recent quarters.

Given the current high price, we estimate that this will clearly show up as a negative factor in the earnings. However, our estimates are based on Bloomberg's forecasts of falling fuel prices during 2027, which would alleviate Finnair's situation. As Finnair's Asian traffic capacity increases and Persian Gulf competitors' operations normalize, we estimate that the company's load factor and/or unit revenues in Asian traffic will weaken, which will negatively impact earnings in 2027. In our view, if fuel prices remain at current levels, it poses a negative risk to our 2027 forecasts, as it is unlikely that ticket prices can be raised accordingly.

Share prices reflect an overly optimistic outlook

Based on our estimates and adjusted for deferred taxes, Finnair's P/E ratios for 2026 and 2027 are approximately 6x and 12x, and adjusted EV/EBIT multiples are around 8x and 11x. Thus, based on this year's good earnings, the stock trades within our accepted ranges (adj. P/E: 6x-9x adj. EV/EBIT: 6x–9x) but clearly above them next year and at the upper end of the ranges in 2028. Also, in our opinion, a P/B ratio above one is high, as our estimates indicate that the return on capital will remain below the required return. In addition, the stock’s DCF value is lower than the current price level. Therefore, in our view, Finnair's expected return remains weak, even though the earnings outlook for this year is good.