1

Finnair Q3 2017 result25 October 2017CEO Pekka Vauramo

• Revenue up by 15% to record level of 735 M€

• Aircraft flew full, passenger load factor was 87%• Asian routes and San Francisco sold well

• Record in daily number of passengers in July, +40,000

• Ancillary sales, cargo and travel services grew at double-digit rates

• Customer satisfaction (NPS) at record level

• The first-phase of extensive long-haul fleet renewal was completed

• Equity ratio above the industry average

2

All-time best quarter

NPS = Net Promoter Score.

Comparable operating result has improved for 12 quarters in a row

3

Comparable operating result, 12 months rolling

0

150

100

50

-50

24

Q3 2015

Q3 2017

6155

Q2 2016

37

54

149

Q4 2015

96

Q1 2016

Q2 2017

Q3 2016

Q1 2017

Q4 2016

53

14

-24-31

Q4 2014

Q3 2014

-36

Q2 2015

-48

Q1 2015

3

Revenue735 M€+15%

(640.9 M€*)

Comparable operating result

119 M€+81%

(65.7 M€*)

RASK +3.3%CASK -3.5%

NPS 52%(44%*)

* Q3 2016. NPS = Net Promoter Score.

-2.1% -1.6% -1.4% -1.1% 0.6% 1.0% 1.6% 2.3% 2.3% 2.4% 2.6% 4.0% 6.0%Comparable operating result, % of revenue

Revenue, M€

• Asia +22.7%• North-Atlantic +3.6%• Europe +15.1%• Domestic +1.9%*

Passenger Load Factor, %

4

• Asia +3.7% -p• North-Atlantic +8.1% -p• Europe +1.1% -p• Domestic -2.8% -p*• Total. +3.0% -p

Capacity (ASK), M km

• Asia +15.1%• North-Atlantic +0.3%• Europe +9.5%• Domestic +0.1%*

299798801

300

Europe

4 0053 657

DomesticNorth-Atlantic

4 9874 332

Asia

84

68

838187 87

66

848991

Europe Domestic TotalNorth Atlantic

Asia

* Domestic flying restricted by runway renewal at Oulu.

250

200

150

350

0

300

100

50 45

310

North-Atlantic

Asia

266 269

43

327

Europe Domestic

3333

Q3 2017Q3 2016

Well-timed growth, right network decisions and strong passenger demand

• Strong demand from Japan and China to Europe

• Tight competition and consolidation continue• AirBerlin and Monarch bankruptcies, Alitalia• LCC’s exploring partnership options to expand

networks• SAS plans directed share issue aimed at

strengthening balance sheet

• Passenger load factor decreasing in domestic flying

• Finnair acquires Norra on an interim basis

5

Strong demand environment – but with uncertainties

• We target to grow faster than our European peers in the traffic between Asia and Europe

• New destinations: Nanjing, Stuttgart, Lisbon, Bergen & Tromsø 2018

• Additional capacity to existing destinations: 145,000+ seats to Berlin

• Additional frequencies to Asia and America• Finnair Holidays Finland & Sweden: a new product

combining the best of independent travelling and package holidays

• COOL cargo terminal ramp-up and implementation

• Recruitments continue, focusing mainly on flight crew

6

We continue our growth strategy

• New long-haul destinations• Goa, India 1 November• Puerto Vallarta, Mexico 5 November • Puerto Plata, Dominic Republic 30 November• Havana, Cuba 1 December

• New non-stop flights to Lapland airports from London Gatwick, Paris and Zurich

• In total, Finnair is offering 430,000 seats to five of Lapland’s airports during the winter season, over 20% increase compared to the previous winter season

7

Finnair’s route expansion to reach all-time high during winter season 2017/18

• Net Promoter Score (NPS) 52%

• Fazer selected as the new lounge partner

• Further development of inflight meals

• Investments in personal services

8

Better customer experience

• Digital channels create already 23% of total ticket sales (+16%)

• 180,000 active mobile app users (+88%)• 2.3 million visitors/month on internet site

(finnair.com) (+23%)

• Digital tools for personnel: SkyPay, maintenance apps

• Bókun co-operation to accelerate growth of Finland’s travel industry

9

Digitalisation accelerates growth

15-year Finnair share performance (price)

10

0

2

4

6

8

10

12

14

16

Market Cap1,423.6 M€(23 Oct 2017)

Strategy 2018−2020

• The growth plan and the four previous focus areas were reviewed and confirmed:

• Doubling of Asian traffic in 2018 versus 2010 (two years ahead of original schedule)

• Doubling of ancillary revenues in 2020 versus 2016

• New target for the number of passengers, 20 million in 2030

11

Financial targets unchanged: • EBIT margin 6% over cycle • EBITDAR margin minimum of

17% over cycle• Adjusted gearing maximum of

175% • Return on capital employed

(ROCE) minimum of 7%

Growth Customer Experience

People Experience

Transfor-mation

Outlook unchanged

• Finnair estimates that in 2017 its capacity will grow approximately 9 per cent, weighted strongly towards the second half of the year. Full-year revenue is expected to grow approximately in line with capacity.

• Finnair expects its comparable operating result for 2017 to be in the range of 135-155 million euro (2016: 55 million euro), if current fuel prices and exchange rates prevail and assuming no material changes in business environment.

12

13

FinancePekka Vähähyyppä

Comparable revenue*

Comparable operating result nearly doubled year-on-year

Capacity and traffic

14

Profit improvement driven by traffic growthancillary sales, cargo and travel services grew at double digit rates too

Comparable operating result

735

Q3 2016 Q3 2017

637

+15.4%

Ancillary salesPassenger revenue

Travel servicesCargo

8.000

12.000

10.000

2.000

6.000

4.000

2.500

1.000

1.500

3.000

3.500

500

0

2.000

0

10.093

Q3 2016

8.799

+11 %

Q3 2017

7.6539.087

Passengers Traffic (RPK)Capacity (ASK)

Pax, milj.ASK, milj.

PLF 84.2%

PLF 87.2%

* excl. SMT

Q3 2017

+81 %

66

119

Q3 2016

Biggest changes in Q3 2017 vs. Q3 2016

• Passenger revenue up by 16% - passenger load factor and yields increased at the same time as capacity increased 11.1%. Ancillary sales, cargo revenue and travel services revenue grew at double digit rates.

• Increase in staff costs is explained by an increase in the number of personnel from the comparison period, acquisition of Finnair Kitchen, extensive training of flight crew and provisions made in the third quarter for incentives and profit-based contributions in the personnel fund

• Tour operator costs increased as a result of growing volumes and changes in destination mix.• Fleet growth and renewal increased aircraft leases and depreciations.

Q3 EBIT increased by +53 M€ year-on-yearyields and loads were above prior year level despite of the capacity growth

15

4.8

Other exp.

-17.3-4.2

Tour operator

Staff Leases&depreciation

CateringFuel

Ancillary & retail 3.6Passenger 81.8

Revenue

-4.75.6

118.96.5

Travel services 6.7

Q3 EBIT

65.7

Other (NET)

-25.5

Q3 EBIT PY

Cargo 6.2

Travel agency -3.7

94.5

-6.4

Rents

+53.2

Q3 PY

27,878

Q3 CY

29,480

+5.7%

Q3 PY

9,087

Q3 CY

10,093

+11.1%

Q3 PY

2,987

3,274

Q3 CY

+9.6%

RASK

173EUR / PAX

Q3 PY

+5.7%

183EUR / PAX

Q3 CY

84.2

+3.0pp

Q3 CY

87.2

Q3 PY

Q3 CY

+0.8%

Q3 PY

11.4EUR /PAX

11.3EUR /PAX

Q3 PY Q3 CY

+3.3%

7.057.29

Q3 CYQ3 PY

38.8KG

+12.9%

43.8KG

Q3 CY

1.18EUR /KG

Q3 PY

1.17EUR /KG

+0.6%

FLIGHTS ASK, mill

PAX, 1000 Avg. fare1 PLF, %

Ancillary REV Cargo, mill Cargo yield

1) Avg. fare = Passenger revenue per revenue passengers

Q3 2017 Passenger revenue vs. Q3 2016 Q3 2017 Other revenue vs. Q3 2016, excl. SMT

16

Revenue increased as a result of higher passenger load factors and favourable development of Asian and European traffic

1 Revenue per RPK

Q3 PY Q3 CY

597.7

515.9

Yield, mix, other

15.2

+81.8

FX

-2.915.0

PLF (load)

ASK

54.5

515.9

1.0

Q3 CY

597.7-2.9

DomesticAsia

+81.8

Europe

25.11.9

56.8

AtlanticQ3 PY

Unallo-cated

42.0

Cargo

6.7

Travel services

51.6

48.7

137.7

Ancillary

121.3

Q3 PY Q3 CY

+16.4

3.6

45.5

33.8

6.2 37.4

Travel servicesCargoAncillaryΔ to PY FEA ATA EUR DOM

ASK (%) 15.1% 0.3% 9.5% 0.1%PLF (pp) 3.7 8.1 1.1 -2.8Yield1 (%) 4.4% -4.9% 0.6% 7.4%RASK (%) 8.8% 4.6% 2.0% 3.0%

Total ASK (%) PLF (pp) Yield1 (%)Δ to PY 11.1% 3.0 0.8%Q3 CY 87.2%Q3 PY 84.2%

Balance sheets: new A350 investments increased assets

17

Composition of adjusted net debt

-1.200

-1.400

-400

-200

-600

-1.000

-1.600

-1.800

0

-800

-891

Adjusted interest-bearing liabilities

-765

977

-678

CashAdjusted net debt

7x aircraft

leases + currency hedges

118

141

335413

424

139

30 Sep 2016

2,465

2,825

998

2,529

30 Sep 201731 Dec 2016

130162

Cash977

Fleet1,2611,049

797

591

412

I-B debt750

92

2,825

Equity981

372

30 Sep 2016

828

86

520

874

31 Dec 2016

718

2,529

857

348

30 Sep 2017

655

85

516

2,465

Equity

Assets HFS1

Other liabilitiesProvisions

I-B debt2

Cash

Fleet

Tickets

Other fixed assetsOther assets

1) HFS = held for sale, 2) I-B = interest-bearing

Strong cash flow from operating activities with improved profitability and sales growth – liquid funds grew to almost €1bn

18

liquid funds+180.0 M€

30 Sep 2017

977.3

664.7

117.6

547.1

312.6

31 Dec 2016

418.9

60.0

797.3

378.4

318.4

Cash and bank depositsCash in cash flow

Commercial paper, deposits and funds < 3 monthsCommercial paper, deposits and funds > 3 months

-54.8

EBIT

DA

Disp

osal

s

Divi

dend

pai

d

1.215.0

Inve

stm

ents

1.5

Oth

er

Wor

kinng

capi

tal

Cash

Q2

-96.7 -10.0156.9

Loan

pro

ceed

s

664.7

Loan

pay

men

ts

651.6

Oth

er

Cash

Q3

+13.0mEUR

Financing-10.0mEUR

Investing-80.5mEUR

Operating+103.6mEUR

Revenue Comparable operating result

19

Revenue and comparable operating result development

300

500

600

400

200

100

0

700

800

735

568641

Q3 Q4

622 570521

Q2

633570554 544536

Q1

201720162015

60

0

20

-20

40

100

-40

120

80

1

66

3

Q2

6438

Q4

2

Q3Q1

-28-13-9-15

119

2016 20172015

Adoption of IFRS 16 Leases standard (replaces IAS 17)

20

• Finnair expects to adopt the IFRS 16 -standard from 2019 onwards, and plans to apply the full retrospective method significant impacts on Finnair financial statements and key ratios

• The present value of the future operating lease payments for aircraft and other lease agreements will be recognized as right-of-use -assets and interest-bearing liabilities in the balance sheet.* Lease cost is divided into depreciation of the right-of-use -asset (operating result) and interest cost for the liability (finance net).

• Significant impacts on following key ratios: operating result, EBITDA, cash flow from operating activities, cash flow from financing activities, interest-bearing net debt, gearing, and equity ratio.

INCOME STATEMENT

20

Lease expense Depreciation of ALL leases

Interest expense of ALL

leases

EBIT

PBT

CURRENT NEW

Finance lease depreciation

Finance lease Interest expense

BALANCE SHEET

CURRENT NEWFinance Lease

Asset

Finance Lease Liability

OFF-Balance sheet Operating lease

commitment

“Right-to-use” Lease Asset

Lease Liability for ALL leases

ASSETS

DEBT

OFF BS

*Currently, future lease payments are presented in the notes as operating lease commitments at their nominal value. Based on Finnair's preliminary evaluation, service contracts that relate to the usage of airports and terminals (HEL hub) do not qualify as lease arrangements for IFRS 16 purposes.

THANK YOU

Contact us:

Finnair IR / financial communicationsmari.reponen@finnair.com

Income statement

in mill. EUR7-9

20177-9

2016Change

%1-9

20171-9

2016Change

% 2016Revenue 735,4 640,9 14,7 1 923,1 1 746,9 10,1 2 316,8Other operating income 18,2 16,2 12,1 57,2 56,2 1,8 75,5Operating expensesStaff costs -112,9 -87,4 29,2 -310,3 -272,2 14,0 -362,5Fuel costs -123,8 -128,7 -3,8 -349,8 -376,6 -7,1 -491,5Other rents -36,5 -42,1 -13,2 -119,5 -121,3 -1,5 -167,4Aircraft materials and overhaul -39,7 -39,1 1,6 -125,0 -113,3 10,3 -147,3Traffic charges -72,8 -70,6 3,2 -199,5 -198,0 0,8 -262,8Ground handling and catering expenses -62,8 -65,8 -4,5 -189,6 -193,2 -1,9 -258,9Expenses for tour operations -26,4 -22,1 19,0 -72,8 -64,6 12,7 -87,8Sales and marketing expenses -20,9 -19,0 10,2 -60,3 -57,2 5,5 -76,9Other expenses -68,7 -64,0 7,4 -211,2 -195,6 8,0 -266,6Comparable EBITDAR 188,9 118,3 59,6 342,2 211,0 62,2 270,4Lease payments for aircraft -35,2 -27,0 30,4 -100,5 -82,7 21,5 -109,5Depreciation and impairment -34,7 -25,6 35,4 -94,2 -74,8 26,0 -105,8Comparable operating result 118,9 65,7 81,0 147,5 53,5 175,5 55,2

22

Fuel costs decreased despite spot price increase

• Q3/16 hedging loss 23.6 M€• Q3/17 hedging loss 3.4 M€

129 124

11 -2010 -6

0

20

40

60

80

100

120

140

160

2016Q3 Volume Price Currency Hedgingdeviation

2017Q3

M€

Improved fuel efficiency with fleet renewal and aircraft up gauging

23

% share of operating costs, 1,833 M€ (1-9/2017)

Fuel hedges as at 30 September 2017

24

Fuel the single largest cost item in January – September

20 %

18 %

17 %11 %

11 %

10 %

6 %4 %3 %

Fuel costs

Personnel costs

Leasing, maintenance,depreciation, impairmentTraffic charges

Other costs

Ground handling andcateringOther rents

Tour operators

Sales and marketing

Hedging, currencies and sensitivities 30 Sep 2017

Fuel sensitivities 10% change without hedging

10% change with hedging

Hedging ratio

(rolling 12 months from date of financial statements) H2/2017 H1/2018Fuel EUR 47 million EUR 20 million 76% 69%

Currency split%

7–92017

7–92016

1–9/2017

1–9/2016 2016

Currency sensitivities USD and JPY(rolling 12 months from date of financial statements

for operational cash flows)

Hedging ratio for operational cash flows(rolling 12 months from date of financial statements)

Sales currencies 10% change without hedging

10% change without hedging

EUR 49 48 55 55 56 - -USD* 5 6 5 4 4 see below See below See belowJPY 13 12 10 9 9 EUR 19 million EUR 8 million 67%CNY 10 10 7 7 7 - -KRW 4 4 4 3 3 - -SEK 3 4 3 5 5 - -Other 16 16 16 17 16 - -

Purchase currencies

EUR 57 55 57 54 54 - -USD* 35 38 36 39 38 EUR 55 million EUR 20 million 66%Other 8 7 7 7 8

25 * Hedging ratio for USD basket. The sensitivity analysis assumes that the Chinese yuan and the Hong Kong dollar continue to correlate strongly with the US dollar.