Finnair 26 October 2012 1 Content Market environment in Q3 - PDF document

Q3 Result 2012 Finnair 26 October 2012 1

Content • Market environment in Q3 • Business performance and strategy execution • Outlook • Financials 2 Finnair Q3 Result, 26 October 2012

Market Environment • The global economy remains fragile, slow grow th expected throughout 2012 in most economies. The main dow nside risk of substantial deterioration of the Eurozone remains, w hile economy in China appears to stabilize. • According to I ATA, airline performance remains challenging; – Historically airlines have slipped from profit to loss whenever GDP growth has fallen below 2% . – Oil price developments and expectations for the rest of the year have also left IATA’s 2012 forecast unchanged at $110 a barrel, an historically high level. – The modest improvement in 2012 airline industry profits is due to better airline performance, and also due to more robust demand to travel earlier this year. – Consolidation is producing positive results. – Asset utilization in the passenger business is high across many markets. – In past cycles, passenger load factors and aircraft utilization have fallen by this stage, in the face of slowing demand and increasing aircraft deliveries. – In this cycle, airlines have kept both load factors and aircraft utilization high, allowing yields to improve and spread fixed costs more widely. – Weaker cargo market has, however, seen asset utilization fall. 3 Finnair Q3 Result, 26 October 2012

Consolidation continues in the industry • Alliance landscape is changing – Qatar to join One world alliance, Middle-Eastern airlines active in partnering with legacy carriers • Market exits in short haul traffic • Legacy carriers continue to restructure their loss-making short haul operations 4 Finnair Q3 Result, 26 October 2012

Positive trend in business perform ance strengthens Finnair’s position in the m arket 5

Strong Q3 performance • All time high Q3 Turnover and Operational EBI T – Turnover 650.3 M€ (+ 7.1% ), EBIT 48.9 M€ (+ 77.2% ) • Stable financial position – Net cash flow from operations 44,5 M€ in July-September – 402.9 M€ short-term cash and cash equivalents (approx. 18% of annual turnover) • Notable improvements in traffic performance : – Load factor + 3.9% -p – RASK + 7.8% – Top performance in punctuality, over 90% of flights arrived on time 6 Finnair Q2 Result, 10 August 2012

Turnover grow th continued w hile EBI T* improved by 77.2% Quarterly turnover, € m illion Quarterly Operational EBI T, € m illion Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 700 60 600 40 500 20 400 0 300 -20 200 -40 100 -60 0 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 * Operational result (EBIT), excluding non-recurring items, capital gains and changes in the fair value of derivatives and in the value of foreign currency denominated fleet maintenance reserves 7 Finnair Q3 Result, 26 October 2012

Operational EBI T build-up in Q3 2012 Milj. Eur 140,0 120,0 -2 ,4 -4 ,6 5 ,8 8 ,6 -6 ,1 100,0 -6 ,2 1 1 ,0 -1 1 ,4 1 2 ,7 80,0 -3 5 ,3 60,0 4 9 ,2 40,0 4 8 ,9 20,0 2 7 ,6 0,0 8 Finnair Q3 Result, 26 October 2012

Operational EBI T build-up YTD 2012 250,0 11,0 -1,7 200,0 11,1 11,5 -18,1 -19,3 20,6 -21,1 150,0 22,7 100,0 -96,3 147,7 50,0 38,6 0,0 -29,3 -50,0 9 Finnair Q3 Result, 26 October 2012

Unit revenue improvement continues • Unit revenue per available seat kilom etre ( RASK) up by 7 .8 % in Q3 as both passenger load factor ( PLF, + 3 .9 % -p) and yield per revenue passenger kilom etre ( RPK yield, + 2 .3 % ) im proved y-o-y Q3 RASK + 7 .8 % PLF RPK yield + 3 .9 % -p + 2 .3 % 10 Finnair Q3 Result, 26 October 2012

Strong traffic performance in Q3 2012 Asian share 5 2 .3 % of the total capacity North Am erica Europe Asia ASK ASK 1 ,3 % -0 ,5 % ASK 4 ,3 % RPK RPK 1 ,9 % 9 ,2 % RPK 6 ,4 % PLF PLF 0 ,5 % -p 6 ,9 % -p PLF 1 ,6 % -p Traffic revenue* Traffic revenue* 8 ,1 % 1 2 ,2 % Traffic revenue* 1 1 ,4 % Dom estic Leisure traffic Total traffic ASK ASK -9 ,5 % 2 3 ,6 % ASK 3 ,4 % RPK RPK 2 9 ,9 % 2 ,6 % RPK 8 ,6 % PLF PLF 7 ,4 % -p 4 ,5 % -p PLF 3 ,9 % -p Traffic revenue* Traffic revenue* -9 ,4 % 2 4 ,2 % Traffic revenue* 1 1 ,0 % Passenger revenue split 7 % 5 % Cargo 5 % Asia ATK -4 1 ,7 % Europe RTK -2 6 ,3 % 5 1 % Dom estic OLF 3 2 % 1 7 ,0 % -p North Atlatic Traffic revenue -3 0 ,3 % Charter * passenger revenue 11 Finnair Q3 Result, 26 October 2012

Strategy im plem entation yielding results 12

Finnair has strong presence in Asian key economies, weekly frequencies* Japan China 50 28 24 21 34 29 16 27 24 Finnair Lufthansa Air France KLM Finnair Lufthansa Air France KLM IAG Republic of Korea Singapore 12 13 7 7 7 7 7 6 Finnair Lufthansa Air France KLM Finnair Lufthansa Air France KLM • * Finnair is the 3 rd largest carrier in its destinations, estimated market share of 5.9% . • Market size of 20 million transfer passengers annually, globally one of the fastest growing traffic areas. • Traffic between Europe and China forecasted to triple during the next 30 years. Finnair Q3 Result, 26 October 2012 13

Targeted savings of 80 M€ already achieved, 90 M€ by the end of the year Total target 1 4 0 M€ Savings progress to target 2 % 8 % Maintenan 2 5 % 2 6 % 74% ce 8 % Personnel 4 3 % 57% Other 1 0 2 % costs 9 % Leasing Fleet 1 0 5 % Sales and 1 0 9 % distributi… 1 0 % Catering 1 4 8 % 2 4 % Ground 3 8 % 62% handling 1 4 % Fuel 1 5 5 % Maintenance Personnel 0% 20% 40% 60% 80% 100% 120% 140% 160% Other costs Leasing Sales and distribution Catering Ground handling Fuel Finnair Q3 Result, 26 October 2012 14

New 60 M€ savings program launched • Despite the good advancement of the structural change and cost reduction program as a whole, the company has not progressed as planned in all its savings categories – Finnair still has a long way to go to reach its long-term target operating profit margin of 6 per cent – In the face of high fuel prices, intensifying competition and significant fleet investments in the coming years, the company must achieve a marked improvement in profitability. • New cost reduction program published with the aim of achieving a permanent reduction in costs of a further 60 million euros by the end of 2014 15 Finnair Q3 Result, 26 October 2012

Achievem ents so far • Fleet optimisation in European traffic: 11.5 M€ savings – discontinuation of 4 A320 series aircraft lease agreements and subleasing 5 E170 aircraft – Fleet leasing contracts renegotiated and renewed • I mproved route planning and aircraft utilisation – Low performing routes discontinued, average aircraft utilisation up by over an hour a day to 9 hours • Partnerships in non-core areas for improved cost efficiency • Support functions streamlined • Centralized procurement in place cost savings so far 16 M€ – • Faster check-in w ith automation

Partnerships an integral part of restoring profitability Operation Partner Status European Analysis on-going Airbus traffic European Oct 2012 Embraer traffic Domestic traffic Oct 2011 Catering Aug 2012 Engine and component Jul 2012 maintenance Ground handling Nov 2011 17 Finnair Q3 Result, 26 October 2012

Flybe cooperation brings cost benefits • Contract Flying for Finnair: – Finnair purchases 100% of seat capacity in Flybe-operated ATR-72 and Embraer 190 aircraft – Finnair network planning, pricing, revenue management, marketing and commercial risk – Flybe on board product on ATR aircraft – 10 international and 5 domestic routes • Contract flying effects on the P&L – A proportion of staff costs and fleet maintenance reserves will shift to ”other rental payments” inside the P&L – No changes in fuel, traffic charges, ground handling, catering and maintenance cost book entries – No decreasing effect on the top line 18 Finnair Q3 Result, 26 October 2012

Flybe Nordic already the 4th largest operator in the Nordic and Baltic Countries* • Leading regional carrier in the Nordic and Baltic Countries – Turnover of 102 million euros in 2011 – Approx. one million passengers during the first year – Over 600 employees in Finland in October 2012 – Number of employees has doubled during the first year of operations, growth continues – 34 aircraft * Measured in the number of flights 19 Finnair osavuosikatsaus, 26.10.2012

Distinct products for different traffic areas LONG HAUL Asia & North Am erica SHORT HAUL Feeder traffic, European m ajor routes JV and/ or tactical partnerships possible Feeder traffic, European niche routes Embraer contract flying / * REGI ONAL TRAFFI C Dom estic and som e Nordic routes ATR contract flying / * * Finnair owns 40% of Flybe Nordic Finnair Q3 Result, 26 October 2012 20