finnair group interim results january-june 2001

Finnair Group Interim results

January-June 2001

A strong downturn in the industry -

Finnair one of the best performers

Industry market conditions

• Total demand has clearly slowed down• Airline profitability has weakened drastically• Passenger and cargo volumes are declining• Cabin factors among European airlines has

fallen, especially on North American routes

Finnair at the forefront

• Finnair´s strong market position well maintained

• Profitability well above the industry average• Healthy cashflow, strong balance sheet• Cost per unit trend good for eight quarters

already• Improved productivity• Strong growth in on-line sales• Quality of operations on target

– punctuality and quality among best in Europe

Wind chill factors

• First weaker quarter since autumn 1999• Business travel on the decline, weaker

domestic demand• High cost of fuel and the dollar• Low visibility due to uncertainty of global

economy• Operating result expected to fall clearly below

2000 result

Q22001

Q22000

H12001

H12000

Turnover 440.2 414.2 860.3 813.0

EBITDAR, excl. book gains 69.3 70.2 117.5 109.9% of turnover 15.7 16.9 13.7 13.5

EBIT 30.3 55.2 45.0 43.9% of turnover 6.9 % 13.3 % 5.2 % 5.4 %

EBIT excl. book gains 23.1 32.0 28.6 20.0% of turnover 5.2 % 7.7 % 3.3 % 2.5 %

Profit before taxes and extraordinary items 30.8 57.1 46.1 52.0% of turnover 7.0 % 13.8 % 5.4 % 6.4 %

Earnings per share, EUR 0.23 0.47 0.34 0.37Equity per share, EUR 7.54 7.28

Net debt, MEUR 152 86Equity ratio, % 42.0 43.7Gearing, % 23.7 13.9

Key figuresMEUR

Operating result for H1/2001 remained at the previous year’s

level, but Q2 was weaker • January-June 2001 profit after financial items and excluding

revenues from the sale of assets, amounted to EUR 28.6

million (MEUR 28,1), Q2 MEUR 22,6 (33,9 MEUR)

• Q2 yield: -1.6 % (per RPK), +2.6 % (per RTK)

• Q2 unit costs: -1,0 %

• Q2 operating costs +9.5 %, excl. jet fuel +7.8 %

• Q2 jet fuel costs +24.9 % (9.4 MEUR)

• H1 Staff productivity +5 %

Finnair trafficJanuary-July 2001

Passengers DemandRPK

ProductionASK

CF % Change%-units

Scheduled- Intl. premium- Intl. tourist class

+3.1 %-3.4 %+9.6 %

+6.5 % +6.8 % 61.0 % -0.2

Leisure +1.4 % -1.8 % -3.4 % 90.2 % +1.5

Total traffic +2.8 % +3.1 % +3.4 % 69.9 % -0.2

CF %: Cabin factor

Growth in Business and Tourist classInternational scheduled traffic

-20,0

-15,0

-10,0

-5,0

0,0

5,0

10,0

15,0

20,0

01.00 02.00 03.00 04.00 05.00 06.00 07.00 08.00 09.00 10.00 11.00 12.00 01.01 02.01 03.01 04.01 05.01 06.01 07.01

%

Business class Tourist class

40

50

60

70

80

90

100

Total traffic Europe N.-America Far East Domestic Scheduled Leisure

2001 2000

Cabin factorJanuary-July 2001 & 2000

%

-15

-10

-5

0

5

10

15

20

25

Total traffic Europe N.-America Far East Domestic Scheduled Leisure

ASK RPK

Demand (RPK) and production (ASK)January-July 2001

%

Growth in turnover January-June 2001 +5.8 %

MEUR

0100200300400500600700800900

1000

1997 1998 1999 2000 2001

Q2Q1

Second Quarter EBIT1997-2001

0

10

20

30

40

50

60

1997 1998 1999 2000 2001

0

4

8

12

16%

EBIT as % of turnover

MEUR

-10

-5

0

5

10

15

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

YieldUnit costsUnit costs excl. jet fuelUnit costs excl. exceptional itemsUnit costs excl. exceptional items and fuel

Yield and unit cost development Year on year change

1999 2000

%

2001

-30

-20

-10

0

10

20

30

40

50

60

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

EBIT from operations Book gains

MEUR

1998 1999

EBIT per quarter

2000 2001

-40

-30

-20

-10

0

10

20

30

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

MEUR

1998 1999

Change in EBIT per quarterExcluding book gains from asset disposals

2000

Change excl. exceptional items in the closing of accounts and due to change of fiscal year

*

*

2001

*

EBITDARExcluding gains from asset disposals

0

50

100

150

200

250

300

1999 2000 H1 2000 H1 2001

MEUR

Cash flow and Capex

0

50

100

150

200

250

300

1999/ 2000 2000 H1 2000 H1 2001

Cash flow from operations, incl. proceeds from asset disposals

Investments incl. predelivery payments

MEUR

Net debt June 30, 200117.6 % of turnoverMEUR

0

50

100

150

200

250

300

350

1997/ 98 1998/ 99 1999/ 00 2000 Q2 2001

I nterest bearing debt

Liquid funds

Strong balance sheetEquity ratio

%

35

40

45

50

1997/98 1998/99 1999/00 2000 Q2 2001

Gearing%

-10

-5

0

5

10

15

20

25

30

1997/98 1998/99 1999/00 2000 Q2 2001

ROCE and ROE rolling 12 months

0

3

6

9

12

15

18

Q4 1999 Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001

ROE ROCE

%

0

2

4

6

8

10

12

1996/ 97 1997/ 98 1998/ 99 1999/ 00 2000 Q2 2001

Eguity per share Share price, high Share price, low

EUR

Finnair sharePrice to Book

Finnair GroupBusiness Areas as of Jan 1, 2001

C argo L e isu re S ch ed u ledP assen g er

T ra ffic

A v iationS erv ices

T ravelS erv ices

S up po rtS erv ices

G rou p S trategyresou rces

Finnair Group business areas

Q1 2001 Q2 2001 H1 2001 Q1 2001 Q2 2001 H1 2001MEURScheduled Traffic 295.9 313.3 609.2 18.1 18.4 36.5Leisure 93.9 71.0 164.9 0.4 -0.8 -0.4Cargo 28.6 33.5 62.1 -1.1 -0.1 -1.2Aviation Services 116.6 129.2 245.8 1.3 11.8 13.1Travel Services 22.5 26.5 49 1.0 2.1 3.1Support Services 24.2 22.3 46.5 -5.1 -1.0 -6.1- less internal sales -161.7 -155.5 -317.2Total 420.1 440.2 860.3 14.7 30.3 45.0Previous year 398.8 414.2 813.0 -11.3 55.2 43.9Change % 5.3 6.3 5.8 -45.1 2.5

TURNOVER EBIT

Capital employed per Business AreaJanuary 1, 2001

502

356

116

13 11 60

100

200

300

400

500

600

MEU

R

Scheduledtraffic

Supportservices

Aviationservices

Leisure Cargo Travel services

Group personnel

7 000

8 000

9 000

10 000

11 000

12 000

1997/98 1998/99 1999/00 9m 2000 6m 2001

-2,3%

Group Business AreasPersonnel Jan-Jun 2001

4580

3570

1442

499 418 339

0

1000

2000

3000

4000

5000

Aviationservices

Scheduledtraffic

Travel services Supportservices

Cargo Leisure

From here onward• Increase of capacity for winter season approx. 2%

in tonne and 6% in passenger kilometers• New growth in Asia and Baltic region

– fourth MD-11 into regular scheduled service– two leased B757 into leisure traffic– Startup of Aero and development of feeder traffic

• More in-depth cooperation within alliance• Operating costs

– distribution and purchasing

• Electronic and mobile eFinnair

“Wind chill foreseen, but long term confidence remains”

Appendices

Changes in Passenger Traffic & Capacity

TOTAL TRAFFIC

-15

-10

-5

0

5

10

15

20

25

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

feb ap

r

jun

%

Traffic - Revenue Passenger-Km

Capacity - Available Seat-Km

19991998 2000 2001

Changes in Passenger Traffic & Capacity

EUROPE

-20

-15

-10

-5

0

5

10

15

20

ap

r

jun

au

g

oct

de

c

feb

ap

r

jun

au

g

oct

de

c

feb

ap

r

jun

au

g

oct

de

c

feb

ap

r

jun

%

Traffic - Revenue Passenger-Km

Capacity - Available Seat-Km

19991998 2000 2001

Changes in Passenger Traffic & Capacity

ATLANTIC

-60

-50

-40

-30

-20

-10

0

10

20

30

40

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

feb

apr

jun

%

Traffic - Revenue Passenger-Km

Capacity - Available Seat-Km

19991998 2000 2001

Changes in Passenger Traffic & Capacity

FAR EAST

-40

-30

-20

-10

0

10

20

30

40

50

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

feb

apr

jun

%

Traffic - Revenue Passenger-Km

Capacity - Available Seat-Km

19991998 2000 2001

Changes in Passenger Traffic & Capacity

DOMESTIC

-60

-50

-40

-30

-20

-10

0

10

20

30

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

feb

apr

jun

%

Traffic - Revenue Passenger-Km

Capacity - Available Seat-Km

19991998 2000 2001

Changes in Passenger Traffic & Capacity

LEISURE

-30

-20

-10

0

10

20

30

40

50

ap

r

jun

au

g

oct

de

c

feb

ap

r

jun

au

g

oct

de

c

feb

ap

r

jun

au

g

oct

de

c

feb

ap

r

jun

%

Traffic - Revenue Passenger-Km

Capacity - Available Seat-Km

19991998 2000 2001

SHARE OF BUSINESS CLASS

International scheduled traffic - 12 mths rolling average

24.7

24.3

23,0

23,5

24,0

24,5

25,0

25,5

26,0

26,5

01.00 02.00 03.00 04.00 05.00 06.00 07.00 08.00 09.00 10.00 11.00 12.00 01.01 02.01 03.01 04.01 05.01 06.01 07.01

%

TRAFFIC GROWTH vs PASSENGER CABIN FACTOR

12 m rolling sum

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

01.9

6

01.9

7

01.9

8

01.9

9

01.0

0

01.0

1

RPK

Y-o-y growth %

58,0

60,0

62,0

64,0

66,0

68,0

70,0

72,0

74,0

76,0

cf %

change, y-o-y (left) cabin factor (right)

Jet fuel pricesJ et Fuel 1996-2001; USD / tonne 20.8.2001

100

150

200

250

300

350

400

01/96 07/96 01/97 07/97 01/98 07/98 01/99 07/99 01/00 07/00 01/01 07/01