1

28. huhtikuuta 2011 1

FINNAIR GROUP INTERIM REPORT JANUARY 1 – MARCH 31, 2011

Key Facts from the First Quarter

2

Industry continues on growth track

• Air Traffic on the rise:

– IATA estimate for the capacity growth 6%* in 2011

– Weak Net Profit Margins expected (1.4 %)

• External disturbances and overcapacity have a negative effect on the load factors, the fuel cost increase cannot be transferred to ticket prices

• Finnair Q1 traffic +12.1% (ASK):

– Asian traffic grew 20.2% (ASK)

– Asian traffic revenue +23%

– Global corporate sales +19%, outside Finland +43%

• Finnair Passenger load factor 72.6%

– Q4 2010 Strike continued to have an effect on Asian leisure demand during Q1

– Events in Japan , Middle East and Africa affected strongly on the Q1 sales

• Cargo continued to develop positively, revenue up by 57%

* compared with previous year

Traffic Region Development Q1 2011 vs. Q1 2010

ASK 9,7 %

RPK -0,8 %

PLF% -6,4 %-p

Traffic revenue 0,4 %

Europe

ASK 15,1 %

RPK 9,6 %

PLF% -3,7 %-p

Traffic revenue 18,8 %

North Atlantic

ASK 20,2 %

RPK 5,0 %

PLF% -10,7 %-p

Traffic revenue 22,9 %

Asia

ASK 20,0 %

RPK 5,1 %

PLF% -7,6 %-p

Traffic revenue 9,6 %

Domestic

ASK -3,1 %

RPK -3,8 %

PLF% -0,7 %-p

Traffic revenue -2,3 %

Leisure traffic

ASK 12,1 %

RPK 1,7 %

PLF% -7,4 %-p

Traffic revenue 9,4 %

Total

ATK 62,4 %

RTK 42,5 %

CLF% -8,7 %-p

Traffic revenue 57,0 %

Cargo

3

We are Investing in Growth and Partnerships

• Singapore route launch in May 2011; outlook positive

• We are developing our cooperation in feeder fraffic and cargo to enable growth and to increase cost efficiency

– Air Berlin cooperation had a good start

– In Finncomm Airlines’ partnership arrangements we are seeking a solution in cooperation with an industry partner

– American Airlines’ Chicago route launch in May 2011

– Kingfisher connections in India

– Qantas/Jetstar offers connections to Australia and New Zealand from our Asian flights

– Cargo Joint Venture – cost-efficient cargo capacity from Helsinki

to long-haul destinations at the end of the year

We will continue to improve productivity and invest in service expertise

• In our operations, we will focus on business growth areas

• Cost-efficiency and additional capacity in European traffic with Airbus A32S cabin retrofit and higher fleet load factor

• Catering: industry review of alternative cooperation solutions

• Operational efficiencies through process development projects

• Improved efficiency in purchasing

• Significant service-expertise training and development programme under way

4

Finnair is a quality airline

• We are the leading European airline in level of customer service; customer satisfaction still rising

• Our operational quality is top class, punctuality has returned to a good level, operational quality indicators have improved all along the line

• Competitive advantage from customer service: status of most desired airline in Asia-Europe traffic the goal

• We are developing our service culture and

sharpening our service identity

Key figures January - March 2011 vs. 2010

183,5-55,1 %68,730,9Capital expenditure (gross)

-22,8-56,2 %-21,7-33,8Net profit

-13,3-66,4 %-25,9-43,1EBIT

-0,2 %-2,6 %-p-5,5 %-8,1 %Operational result, EBIT,

% of turnover

-4,7-63,8 %-26,3-43,1Operational result, EBIT

2 023,310,8 %481,5533,7Turnover

FY 2010vs. PYQ1 2010Q1 2011mill. EUR

5

Jet fuel spot + fwd curve

Cost Structure Q1 2011

Fuel 23 %

Personnel 20 %

Other Costs 10 %

Traffic Charges 9 %

Depreciation and Leasing 7 %

Groundhandling and Catering 7%

Tour operator costs 7%

Other Rents 5%

Maintenance 5%

Sales and Marketing 4%

6

Headcount in decline

0

2000

4000

6000

8000

10000

12000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q12011

Average number of employeesNumber of Employees

7470

Restructuring of technical services

• In the restructuring the company discontinues the heavily loss-making aircraft base maintenance service offered to external customers

• Service provision will in future be focused on line maintenance of the company’s own aircraft

• Employee consultations within Finnair Technical Services were completed at the end of March, a reduction of 450 jobs will be implemented by the end of the year

• As part of the restructuring, a letter of intent signed on a possible transfer of business of warehouse services

• The first-quarter results include a non-recurring personnel expense item of 18.4 million euros for the restructuring

7

Development of operating expenses per ASK, Airline, Change Quarter 1 2011 vs. Quarter 1 2010

RASK, tuotto per ASK

CASK, kustannus per ASK

CASK ilman pa.

Henkilöstökustannus

Maapalvelu- ja catering-kulut

Poistot ja leasing-maksut

Muut kulut

Polttoaine

Liikennöimismaksut

7,4

-8,0

-6,9

Change % Q1 2011 vs. Q1 2010

Change %c ASK

-2,5

-0,1

-1,3

-2,5

-1,1

1,3

RASK, revenue per ASK

CASK, cost per ASK

CASK excl. Fuel

Staff costs

Ground handling & catering exp.

Depreciation & lease expenses

Other expenses

Fuel

Traffic charges

Strong balance sheet Equity ratio and adjusted gearing

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 Q1 2011

Omavaraisuusaste Oikaistu nettovelkaantumisaste, Adjusted Gearing%

80,6

34,7

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Strategy – From Vision to Implementation

Finnair’s vision 2020

• Finnair’s vision is to be number one in the Nordic countries

• The most desired option in Asian traffic, in the transit traffic between Asia and Europe among the three largest

• Significance of Scandinavia as part of domestic market is growing

• Our growth strategy is based on cost-competitiveness, our success factors are quality, freshness and creativity

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Osaka 7

7 New York

Tokio 7Nagoya 7

Soul 7

Peking 7

Shanghai 7

Hong Kong 12

Bangkok 7

Delhi 6

74 Weekly Departures to Asia in the Summer 2011

Singapore 7

New destinations and additional flights in European summer season

• Route to Aarhuus opened in cooperation with Sun-Air

• Malaga and Toronto become scheduled services, five flights per week

• Nice becomes scheduled service, three flights per week

• Four flights per week to Ljubljana

• Daily connection to Gdansk

• Krakow twice per week

• Venice three times per week

• Stuttgart service increased to two flights per day

• Lissabon three flights per week

• Service to Pisa starts on May 13, two flights per week

• Three flights per week to Bergen via Arlanda from May 22

• Three flights per week to Murmansk in summer from 15 June

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Outlook for the Year 2011

• Finnair expects that the second-quarter result will be negative

• The results of the second half of the year expected to be positive

• Turnover expected to grow by more than 10% in the full year

• Finnair will continue measures aimed at restoring operational profitability and will explore new means of increasing cost-efficiency

Thank You

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-60

-40

-20

0

20

40

60

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Milj. EUR

2006 2007 2008 2009

* excl. capital gains, fair value changes of derivatives, changes in the

exchange rates of overhauls and non-recurring items

Operating profit* by quarter

2010 2011

-29,4-46,2Profit before taxes

0,419,6Fair value changes of derivates and changes in the exchange rates of overhauls

-25,9-43,1Operating profit (EBIT)

-82,020,03,6Profit before depreciation and lease payments, EBITDAR*

13,6

10,8

Change %

0,0-19,6Capital gains and non-recurring items

-26,3-43,1EBIT excl. asset sales, hedging & arrangements

511,1580,8Operating expenses

481,5533,7Turnover

Q1 2010Q1 2011Mill. EUR

Result Q1 2011 vs. Q1 2010

*excl. capital gains, non-recurring items and fair value changes of derivatives and changes in the exchange rates of overhauls

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Asia

58 %

North Atlantic

6 %

Europe

29 %

Domestic

7 %

Asia Representing Majority of Scheduled Traffic

Revenue Passenger Kilometers Q1 2011

35 %47 %

13 %

Aasia-Eurooppa

Via Helsinki>50 %

Over a Half of Traffic Revenue from Asia in Scheduled Traffic

Asia USDomestic Europe

Aasia-Eurooppa>60 %

* Cargo revenue about 20 % of Asian traffic revenue total

5 %

(Q1/11)

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Finnair Group2010 Q1EBIT* to 2011 Q1 EBIT* build up

20,6

5,7

-43,1

-26,3

-43,1-27,4

-11,2

26,6

-3,7-2,2

-10,3

-4,0-4,9

-6,1

-50,0

-40,0

-30,0

-20,0

-10,0

0,0

10,0

20,0

30,0

40,0

2010Q

1 EBIT

Traffic revenue

Cargo

reven

ue

Other revenue

Maintenan

ce

Ground Han

dlin

g & Catering

Tour ops. Expen

ses

Salaries

Traffic Charges

Other rents

Fuel

Other exp.

2011Q

1 EBIT

* Operating EBIT

Development of operating expenses, Finnair Group, Quarter 1 2011 vs. Quarter 1 2010

+69,8

+42,3

+27,4

+6,1

+4,0

+0,4

+23,3

+4,9

+3,7

13,6

10,4

4,4

13,7

9,0

10,6

18,7

Change % Q1 2011 vs. Q1 2010

Change %Mill. EUR

0,8

26,1

Operating expenses

Operating expenses excl. Fuel

Fuel

Traffic charges

Expenses for tour operators

Depreciation & lease expenses

Other expenses

Staff costs

Ground handling & catering exp.

14

Development of operating expenses per ASK, Airline, Change Quarter 1 2011 vs. Quarter 1 2010

RASK, tuotto per ASK

CASK, kustannus per ASK

CASK ilman pa.

Henkilöstökustannus

Maapalvelu- ja catering-kulut

Poistot ja leasing-maksut

Muut kulut

Polttoaine

Liikennöimismaksut

7,4

-8,0

-6,9

Change % Q1 2011 vs. Q1 2010

Change %c ASK

-2,5

-0,1

-1,3

-2,5

-1,1

1,3

RASK, revenue per ASK

CASK, cost per ASK

CASK excl. Fuel

Staff costs

Ground handling & catering exp.

Depreciation & lease expenses

Other expenses

Fuel

Traffic charges

Airbus A32S Cabin Configuration Retrofit–Increased Capacity and Productivity

Airbus A319

From 123 to 138 seats

+12.2% capacity

-10.8% unit cost reduction

Airbus A320

From 159 to 165 seats

+3,8 % capacity

-3,6 unit cost reduction

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Key figures of the business segments

93,7 %34,4 %<200 %(vs. PY)

1,37,5-19,2EBITDA

175,0<-200 %52,9%(vs. PY)

1,1-15,6-39,9Adj. op. margin

175,0 %75,0 %-78,5 %(vs. PY)

1,12,8-43,9Operating result

6,5 %3,5 %12,2 %(vs. PY)

106,6114,5452,3Turnover

Travel Services

Aviation Services Airline Business in m EUR

Q1 2011 vs. Q1 2010

Key figures January - March 2011 vs. 2010

5,04-11,7 %4,353,84Share price, EUR

645,8-11,7 %557,4492,0Market capitalisation, mill. EUR

235,10,8 %251,4253,4Interest bearing debt, net, mill. EUR

26 %-0,1 %-p29 %24 %Liquid assets per revenue

(12 months rolling) %

79,6-11,3 %-p91,980,6Adjusted gearing %

27,8-0,2 %-p30,230,0Gearing %

8,00-0,3 %-p8,258,0WACC %

-0,46,8 %-p-8,3-1,5ROCE %, rolling 12 months

-2,79,2 %-p-13,4-4,2Return on equity (ROE) %,

rolling 12 months

36,20,1 %-p34,634,7Equity ratio %

31.12.2010

Change %31.03.2010

31.03.2011

16

Cashflow from operating activites Q1 2011 vs. Q1 2010

+312.1

+18.1

+294.0

-13.6

+100.6

-30.9

+69.7

-38.0

Q1 2011

+333.9Liquid funds at end

+71.0Change

+262.9Liquid funds at beginning

-108.2Cashflow from financing activities

+265.8Change in advances

-68.7Fixed asset investments

+197.1Cash from investing activities

-17.9Cashflow from operating activities

Q1 2010Cashflow statement EUR million

Return on equity and capital employedrolling 12 months

-20

-15

-10

-5

0

5

10

15

20

Q1 20

06

Q2 20

06

Q3 20

06

Q4 20

06

Q1 20

07

Q2 20

07

Q3 20

07

Q4 20

07

Q1 20

08

Q2 20

08

Q3 20

08

Q4 20

08

Q1 20

09

Q2 20

09

Q3 20

09

Q4 20

09

Q1 20

10

Q2 20

10

Q3 20

10

Q4 20

10

Q1 20

11

% ROE return on equity ROCE return on capital employed

-1.5%

-4.2%

17

Capital expenditure andnet operational cashflow

-200

-100

0

100

200

300

400

2006 2007 2008 2009 2010 Q1 2010 Q1 2011

Net operational cashflow Capital expenditureEUR million

30.9

-38.0

Aircraft operating lease liabilities

0

50

100

150

200

250

300

350

400

450

2006 2007 2008 2009 2010 Q1 2011

Milj. EUR

On 31 March all leases were operating leases. If capitalised using the common method of multiplying annual aircraft lease payments byseven, the adjusted gearing on 31 December 2010 would have been 80,6 %

253,2

18

Rolling Hedging Policy

0%

20%

40%

60%

80%

100%

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

hedge ratio

upper

lower

Change in fuel costs Q1 2011

38

132**

105*

-24

2

11

0

50

100

150

Q1/2010 Amount Price Foreign currency

Hedgings Q1/2011

EUR million

* Includes EUR 12 million hedging loss

**Includes EUR 12 million hedging profit

19

Crude oil – speculative positioning on stronger oil is at all time high

Crude oil futures positions in CME

Source: Danske Markets

Capacity, Passenger volume and Load Factor development Q1 y-o-y

-8 %8 %Ryanair

-3 %22 %27 %Norwegian

-1,90 %1,00 %3,50 %Air France-KLM

11,90 %n. 12 %Easyjet

-7,40 %1,70 %12,10 %Finnair

Load Factor change

Passengervolume change

Capacity Change

Airline

2,70 %6,20 %Iberia

-1,9 %11,90 %13,90 %British Airways

-1,90 %8,80 %11,50 %IAG

-8,80 %-1,60 %9,80 %Cathay Pacific

-7,60 %-3,60 %6,40 %Singapore Airlines

-5,30 %0,30 %7,50 %Lufthansa

-5 %0,20 %7,60 %SAS

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Finnair’s financial targets“Sustainable, value-creating growth”

Operating profit Operating profit margin at least 6% => over 120 milj. EUR

EBITDAREBITDAR % at least 17% => over EUR 350 million EBITDAR

Financial added value

Dividend ratio At least one third of annual profit to be paid as dividend

Adjusted gearing Gearing adjusted for aircraft lease liabilities not to exceed140%

Target is to generate positive financial added valueover 8.25 % pre-tax WACC