When Two European State-Controlled Airlines Make Money...

...you know the summer was strong. Today, a discussion of Tap Portugal's and Finnair's third quarter earnings.

Dear readers,

I have heard from some of you that you'd like more stories about European airlines. So today, as we wait for the big groups to report — IAG and Air France-KLM will share results on Friday — I am updating you on two government-controlled network airlines that should be too small and irrelevant to compete with the three giants of European aviation. And yet both Tap Air Portugal and Finnair turned in a solid summer quarter.

First, let’s talk about Tap, which reported a record third-quarter profit of €180.5 ($191 million) on operating revenues of €1.27 billion. Its passenger revenue per available seat kilometer was 8.2 percent higher than summer 2022, and a remarkable 33 percent higher than in the third quarter of 2019.

Perhaps because of its ownership structure, Tap is not the most transparent of airlines, but in its earnings release, the company credited "higher yields along with increased capacity" for its strong third quarter showing. The release also lauded the company for its "strategic approach to seizing market opportunities." Presumably this includes Europe-to-South America traffic flows that the big airline groups covet, and which make Tap an attractive takeover target. The Portuguese government soon expects to sell at least 51 percent of the airline.

Finnair, now roughly 60 percent owned by the Finnish government according to the carrier’s website, is less parsimonious than Tap with information. It reported third quarter net income of €53 million on total revenues of €817 million. More importantly, Finnair executives met Tuesday with analysts while also sharing management commentary in a press release. As a result, we have a much better handle on Finnair’s business than Tap’s. Here's what I found most interesting about Finnair.