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© Finnair | Capital Markets Day, 22 May 20141

Welcome to

Finnair Capital Markets Day22 May 2014, Helsinki

Today’s AgendaTopic Presenter Time Pages

Welcome by the Chairman of the Board Klaus Heinemann, Chairman 13:00 -

Delivering on Strategy Pekka Vauramo, CEO 13:20 6-25

Network development and JBA's Greg Kaldahl, SVP Resource Management 14:00 26-54

Break 14:30

Commercial Strategy- Closing the revenue gap Allister Paterson, CCO 15:00 55-65

Cargo’s role in Asian growth Juha Järvinen, Managing Director of Finnair Cargo 15:30 66-76

Break 15:45

Fleet and funding strategy Erno Hildén, CFO 16:00 77-100

Closing remarks Pekka Vauramo, CEO 16:40 -

Cocktails and informal discussion 17:00


3 © Finnair | Capital Markets Day, 22 May 2014

The Finnair opportunityOur strategic targets and roadmap to reaching them

Pekka Vauramo, CEO Finnair Capital Markets Day, 22 May 2014

Finnair is a network airline connecting Asia and Europe


Over 60 European

and15 long-haul destinations(Summer 2014)

Asia49 %

Europe31 %

Finland4 %

North-Atlantic

5 %

Leisure11 %

2013 ASK split

More than 9 million

passengers and MEUR 2,400 in

revenue in 2013

Fleet of 77 aircraft, of which 44

operated by Finnair.

Financing

Network

Operations

Commercial

5

Cost structure

Major achievements since CMD 2012


We have built one of the best operational airlines in the world...By focusing on:

• Structure, size, governance

• Commitment to quality and safety

• Operational processes

• Hub management

• Vendor management

2013 performance


European benchmark*

Finnair

Punctuality 84.2% 89.4%

Regularity 98.9% 99.8%

Bags (/1000 pax) 9.6 8.1

Connection reliability 98% 98.8%

Safety 1st-3rd**

* Source: AEA** JACDEC 2013 safety ranking. JACDEC =Jet Airliner Crash Data Evaluation Centre.

...and improved cost efficiency & asset utilizationImproved CASK

0,071 0,070 0,071 0,069

0

0,01

0,02

0,03

0,04

0,05

0,06

0,07

0,08

2010 2011 2012 2013

€ce

nts

CASK ex-fuel Fuel

Higher utilization

0

2

4

6

8

10

12

14

16

2010 2011 2012 2013

Blo

ck h

ours

/d

ayNarrowbody Widebody

7

+7.6%+7.8%

+8.4%

+1.3% +3.6% +0.6%

-4.6% -4.1% -3.3%

+6.0% +14.9% +1.6%


101,5

102,0

102,5

103,0

103,5

104,0

104,5

105,0

105,5

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

1 800 000

1,50

1,70

1,90

2,10

2,30

2,50

2,70

2,90

3,10

3,30

3,50

Volume, shares Close, EUR

Finnair share and bond price development


Finnair market cap MEUR 295 (31 Dec 2011)

Finnair market cap MEUR 378 (16 May 2014)

Finnair market cap MEUR 283

(3 Dec 2012)

Finnair share price development 1 Jan 2012-16 May 2014

Finnair Bond price development since 27 Aug 2013

Delivering on strategy for profitable growth

Doubling Asian revenues by 2020 from 2010 level

9

Growing traffic via Helsinki by optimising its strategic location

Creating shareholder value - delivering 6% operational EBIT



Doubling Asian revenuesby 2020

Doubling Asian revenue – Where are we now?

42% of 2013 passenger revenue from Asian traffic

Asian traffic revenue, MEUR


42%

37%

9%

9%3%

Asia EuropeDomestic LeisureNorth Atlantic

CAGR2014–2020

6.96%

* Based on guidance given on 7 May 2014:”Finnair estimates 2014 turnover to be close to 2013 levels.”

Europe-Asia travel expected to increase more than 100% by 2020


M-East180M

60 million(2010)

130 million(2020E)

SIN90M

China's top 3 hubs300MBKK

90MKUL80M HKG

120M

Passenger flows and hub throughput (Asia and Europe, 2020E)

PAX flows: Europe – Middle East /Asia (pax/yr)

PAX throughput at major international airports (pax/yr) M=million

2010

CAGR+6.3%

2020E

Notes: 1. Pax throughput includes both domestic, international and terminal passengers. Figures

include both inbound and outbound pax calculated on basis of country-region pairs. 2. Data available for Mainland China airports does not disaggregate domestic and

international passengers. 3. PAX throughput Middle East includes Dubai airport (112m); Doha (38m); Abu Dhabi

(26m). China includes Beijing (155m); Guangzhou (88m); Shanghai Pudong (83m)Source: IATA, ATI database, BCG analysis; IATA Country Forecasts; BCG Analysis; World Bank.

China’s second tier cities offer great potential

2010 GDP for urban clustersUSD Billions

357

378

418

469

475

527

527

0 200 400 600

Guangzhou

Austria

Shandong

Belgium

Jingjinji

Switzerland

Shanghai

Urban clusters in China and their hub cities

13

Nanning

Changchun-Harbin

Liao central-south

JingjinjiHuhehaote

Taiyuan Shandong BylandCentral

Guanzhong

Coast West

Hangzhou

ShanghaiNanjingHefei

Yangzi mid-lower

Nanchang

ShenzhenGuangzhou (includes Foshan)

Kunming

ChangzhutanChongqing

Chengdu

Source: Dominic Barton, 2013.© Finnair | Capital Markets Day, 22 May 2014

Joint Business Agreement in Europe-Japan traffic strengthens our position in Japan

0%

5%

10%

15%

20%

25%

30%

35%

Mar

ket

shar

e in

EU

R-J

P v

vTr

affi

c*


JAPAN

• After joining the SJB we are now a part of the largest joint business in Europe–Japan vv. traffic

* Source: SRS Q2 2014.

Our strengths in Asia – Europe transfer traffic


Strong Nordic brand appeal

One of world's most punctual airlines

Shortest and fastest Asia-Europe route

Early mover in Europe-Asia direct

flights

Helsinki airport hub

On-going long-haul product development


Growing traffic via Helsinki

Highly efficient Helsinki hub supports Asia-Europe traffic growth Room for growth in Helsinki-Vantaa...• 3 runways• 35 min minimum connection time• Uncongested airspace

...with 24h rotation benefits to Asia• Sustainable competitive advantage and cost

benefits:– Fastest connections between North-

Eastern Asia and Northern Europe– Very high aircraft utilisation in long-haul

traffic – Less need for additional crew members

due to flight time restrictions– Smaller fuel consumption due to shorter

flight times


Cost competitive European feeder network a necessity for Asian traffic growth

European competitive landscape We focus on

• Lowering cost base in short-haul flying– Labour costs– Possible alternative measures

• Continuing Flybe cooperation

• Decision on short haul fleet renewal in the next 18-24 months



Creating shareholder value

Our key mid-term priorities

20

Competitive Cost Structure

Leading Commercial Strategy

Safe, Efficient Operations

CargoNetwork Strategy

FinancingFleet strategy Strategic partnerships

New Digital Finnair

The Building Blocks

The Tools

The Foundation


We are well on track in achieving cost savings – flight crew labour costs still under negotiation


136Other

Pilots

Cabin

Technical & ground services

23

17

18

8

Phase I: MEUR 140

Phase II: MEUR 60

Total target MEUR 200

4

Other employee groups 17

Phase I realised Phase II remaining targetPhase I additional saving reached Phase II realised

4

Savings reached by 22 May 2014: MEUR 167

We are building the foundation for growth

• Competitive cost structure will be key for profitable growth, therefore cost savings remain in our focus.

• As a vital part of our topline growth, we continue to implement our new Commercial strategy and closing the identified revenue gap.

• First A350s enter our fleet next year, and we are ready to grow our traffic building on our existing strengths.


Growth2016

2014Cost

savings

Revenueenhancement A350s

2015

Thank you! Questions?



Finnair Network DevelopmentThe Role of Schedule, Partnerships and Route Development

In Building the Silk Road

Greg Kaldahl, SVP Resource ManagementFinnair Capital Markets Day, 22 May 2014

Silk Road Revisited

In CMD 2012 we shared...

• Industry complexity and changing demographics

• The strength of Helsinki’s geographic position

• Finnair’s strategy to win in dynamic times

• Our methodology for entering new routes

What Have We Done Since Then

• Opened two new seasonal routes to Xi’an and Hanoi

• Entered joint business arrangements for Atlantic and Japan flying

• Taken delivery of five A321 Sharklets and retired our small B757 fleet– Operating cost advantage from commonality

• Established our baseline long-haul fleet plan– Allows for more/less growth based on market

conditions


Today’s Agenda

• Schedule Structure– Helsinki Plan

• Joint Business Agreements– What are they?– What do they mean for Finnair?– How do we get the most from these agreements?

• Route Development– Are there any good markets left?– Where do we go from here?– Will we double Asian revenues by 2020?


27

Schedule StructureA Passenger Friendly Hub


Helsinki offers Finnair a competitive advantage...

28

HEL LHR FRA AMS CDG

Ease of transfer

Uncongested airspace

Runway capacity

Cost competitiveness

Geographic location to Asia

Departure punctuality


...but our growth has created some congestionASIA & NORTH AMERICA

EUROPE & DOMESTICEurope double daily flights (incl. double daily+ markets)

Asia afternoon bank

Asia midnight bank

Overnighting DOM flights

0700 1200 2000 24001700

29

Hub congestion


Main bank feeder flights spilling

30

Bank PLF% Local pax % Transit pax %

Afternoon bank 78 % 39 % 61 %

8 PM bank 66 % 60 % 40 %

Night bank 67 % 69 % 31 %

No connections 61% X X

Early EUR departures 62% X X

Growth in main bank would require adding feeder capacity


Opportunity: four bank structureASIA & NORTH AMERICA

EUROPE & DOMESTICEurope 4 times per day flights (incl. domestic)Asia afternoon bankAsia midnight bank

Overnighting DOM flights

0700 1200 2000 24001700

Asia evening bank and North America midday bank

31Potential to add two new European banks at 12:00 and 20:00


Four bank structure would defend our position in Helsinki hub

• In the four bank structure Finnair would utilize a higher share of the HEL airport capacity vs. the two bank structure leaving idle airport capacity available in HEL

32

-300-200-100

0100200300

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Wee

kly

take

off

s an

d la

ndin

gs

HourTwo Banks Four Banks

Departures


Arrivals

Four bank structure would enable growth and deliver additional benefits

33

Four Bank Structure

Finavia structural changes would not be required

Unit cost saving potential

Capacity additions would support growth, reduce pressure on feeder congestion and enable even further growth

Potential for improved market presence due to early Europe departure



Joint Business AgreementsFriends In High Places

Atlantic Joint Business Agreement Offered “On The Job” Experience

• Finnair is 1% of AJB

• New York and Toronto are less than 5% of Finnair total revenue

• AA/BA/IB are willing partners in growing the business

• Deal negotiation & implementation provided roadmap/learnings for more important Joint Business between Europe and Japan


AJB Accomplishments

• Joint business commenced as scheduled on July 1st 2013

• Implementation was flawless – no adverse customer experiences

• AA/BA/IB now selling AY across Europe/North America

– AY is in hundreds of corporate accounts

• Common Pricing in Europe & North America

– AY has pricing personnel based in London and Dallas

• Governance structure is in place and functioning well


Finnair North Atlantic TrafficRASK & Load Factor Development

But Is AJB Worth Anything?

Share of passengers by Marketing Carrier on Finnair North Atlantic Traffic

37

72%

74%

76%

78%

80%

82%

84%

86%

3,803,904,004,104,204,304,404,504,604,70

2011 Q4 2012 Q4 2013 Q4

RA

SK

* (

€C

ent)

PLF% RASK

0 %

20 %

40 %

60 %

80 %

100 %

2011 Q4 2012 Q4 2013 Q4

AY AA BA IB

*RASK: Ticket Revenue with YR and Transfer Payments


Siberian Joint Business Agreement Will Have Far More Impact

• Finnair is 26% of SJB

• Japan routes are 16% of Finnair total revenue

• SJB is critical to Finnair’s continued success in this region


SJB Accomplishments

• Finnair has entered the SJB on April 1st

• All regulatory approvals secured

• All agreements with partners signed

• Implementation was flawless – no adverse customer experiences

• Common Pricing in Europe & Japan

• First Steering Committee meeting achieved clarity around governance


0%

5%

10%

15%

20%

25%

30%

35%

Mar

ket

shar

e in

EU

R-J

P v

vTr

affi

c*• Alignment with Japan Airlines protects Japan POS revenue

• SJB becomes the largest Siberian joint venture– Strongest partners– Best hubs– Most commercial relevance

• Larger presence will support revenue shift from unaligned carriers

40

For Finnair, SJB Is Both Defensive And Offensive

Seats Europe - Japan

* Source: SRS Q2 2014.


This Leaves Finnair With...

• 21% of capacity and 18% of revenue operating under joint ventures

• A more stable business– Periodic regional weakness can be offset by revenue sharing

• A platform for growth– Stronger sales presence, rationalized pricing, common agenda among partners supports

new services



Route DevelopmentFriends Can Only Take You So Far

Finnair Has Steadily Grown Its Network in Asia

43

2000

ASK (M) Destinations

2 056 3



44


6 176 6


2005


45

2010


11 150 9



46

2014


15 463 15


Are There Any Opportunities Left?

47

Yes!1. China2. Russia3. Additional Pacific Rim Growth4. North America


48Source : Wikipedia

China Is Still Largely Untapped

Cities with non-stop service to Europe (S 2014)

China has 35 cities with a population over 2 million people with no non-stop flights to Europe

Cities with no non-stop service to Europe


New Russian destinations: Potential to improve Utilization and Support the Bank Structure

49

ScheduleDeparture from HEL

Arrival to HEL

22-23 06-07


There Are Still A Number Of Underserved Cities In The Pacific Rim


51

AJB Provides Opportunities For Profitable North America Operations


Fleet Renewal Allows Finnair To Capitalize On These Opportunities...

• A340s are replaced with modern, efficient A350s

• A330s provide flex aircraft to adjust to market demand

• A321s have replaced older, inefficient B757s– Lower trip costs– Similar unit costs to B757s

• Possibilities to expand contract operations– Lower cost European feed


Bottom Line...

Finnair will grow in order to improve profitability and return on invested capital...

...not simply for the sake of growth!


Our Schedule, Partnerships and Route Network Are Parts Of An Integrated Plan• We’re examining options to improve

our schedule structure– Relieve congestion in Helsinki– Provide additional choices for customers

• We’ve entered into strategic partnerships– Create stability in the business– Provide platform for growth

• Our route network is healthy– Multiple opportunities for growth– More European flying can be moved to partners– Fleet renewal will support route development– Focus on profitable growth



Commercial Strategy

Closing the Revenue GapChief Commercial Officer Allister PatersonFinnair Capital Markets Day, 22 May 2014

57

Asia Pacific

13.7%

3.8%

23.7%

30.9%

25.9%North

America

Europe

Home market

0.2%

A global industry:• Finnair participates in three global passenger flow markets• Finnair has a minimal effect on total pax market size


*FY 2013.

Our role is to capture Finnair’s portion or ‘Fair Share’ of the total market*

We have identified annual revenue opportunity of MEUR 80


• The model compares actual performance to an optimal world in terms of network & schedule quality and relative market performance.

• Takes into account Finnair’s 6th freedom profile and small home market.

= MEUR 80

We focus leveraging core strengths into revenue performance

NetworkCustomer

Loyal home market customer base

Strong Nordic brand appeal

Operational Performance

Highest worldwide safety ranking

One of world's most on-time airlines

oneworld alliance member

Shortest and fastest Asia-Europe route

Well established in European markets

Early mover in Asian secondary cities

Helsinki airport hub

59

Our new Commercial Strategy focuses on delivering revenue from:

Smart Product Investments1

Leveraging Technology - "Digital Finnair"2

Revenue Science Expertise3


Smart Product Investments

Signature meals Marimekko amenities Expanded In-flightentertainment

Full flat seats -Route guarantee

Introduced 2013–2014


1

62

In the pipeline – coming soon

Consumer choice products Lounge renewals Wireless on-board Airbus 350 XWB


Leveraging technology– Digital Finnair

Enhanced Sales Applications• Online flight/ancillary revenues• High utility mobile applications• CRM offers & airline services

Customer Experience Applications• Distributed IFE to personal devices• Enhanced onboard revenues


2

63

Driving Demand and Optimizing Revenue -Revenue Science Expertise

Improved Revenue Science• Competitive online price positioning• World-Class revenue optimization• World-Class analytics - leverage CRM & Frequent Flyer Program

2

Enhanced Market Demand• Localized sales products/strategies• Leveraging oneworld frequent fliers• Joint Business Agreements

1


Driving demand: oneworld & JBAs help overcome Finnair’s small home market

oneworld consists of 15 airlines.......which transport 506 million passengers......to 152 countries and 992 destinations

Long haul joint business agreements• Enable growth, decrease risks• Leverage networks & sales strength• Revenues are shared by capacity

65

Atlantic (AJB)

Siberian (SJB)


MEUR 80 annual revenue opportunity will be captured

• We will continue to make smart product investments

• Exploiting technology is key to customer proposition & revenue growth

• We are developing world-class revenue expertise to increase demand and optimize revenue

• JVs/JBAs will enable growth and decrease risks


Differentiated cargo strategy – Driving Asian growth

Juha Järvinen, Managing Director, Finnair CargoFinnair Capital Markets Day, 22 May 2014

Driving growth

• What is Cargo’s role in supporting Asian growth?

• How mega trends and macro dynamics support our growth strategy?

• How Cargo’s differentiation strategy and feeder platform balances freight flows and enables growth in higher value freight exports?


Cargo is a significant revenue generator in Finnair's long haul traffic• Belly Cargo generates 17% of Finnair’s revenue on

intercontinental routes and 11% of Airline business turnover*

• Relative importance will grow as the A350 brings up to 50% more belly cargo capacity by 2020

• Cargo supports our goal to double Asian revenues by 2020

70

Turnover 238 MEUR

(2013)

147,000 Freight tonnes

79 %

11 %12 %

2 %2 % 1 %

Main shipment types

General Cargo PerishableMail Dangerous goodsPharma Other special cargo


*Q1 2014.


SIN

China's top 3 hubs

CAGR+5.7%

BKK

HAN

HKG

Finnair operates in key freight trade lanes & growth markets in Asia, including West & Central China and Vietnam

• Cargo traffic between Asia and Europe is forecast to grow 5-6% annually

Shipment flows: Europe –Middle East/Asia (RTK’s/yr)

Freight through major international airports (RTK’s/yr)

2010

2020E

Mega trends and macro dynamics support our growth strategy

*Source: IATA

Urban clusters in China and their hub cities

72

Nanning

Changchun-Harbin

Liao central-south

JingjinjiHuhehaote

Taiyuan Shandong BylandCentral

Guanzhong

Coast West

Hangzhou

ShanghaiNanjingHefei

Yangzi mid-lower

Nanchang

ShenzhenGuangzhou (includes Foshan)

Kunming

ChangzhutanChongqing

Chengdu

*Source: IATASource: Dominic Barton, 2013.


• Fast growing middle class population and consumerism in China drive cargo growth:– High-end consumer goods from Europe/US– Healthcare & Pharmaceuticals– Infrastructure investments

• New administration committed to development of Western & Central regions– Lower production costs will drive re-

location and growth of manufacturing in the Central and Western regions

Directionally balanced freight growth

China forecast to become the second largest freight market by 2017*

Building Cargo platform to leverage growth opportunities

• Central European cargo hub secures enlarged catchment area

• Differentiated product strategy secures balanced cargo flows, minimizes directionality challenge & controls yield development

• New planned Cargo Terminal at Helsinki would improve quality and unit cost effectiveness


Commercial focus in product portfolio and revenue optimisationProduct Portfolio Design

• Transformation from bulk general cargo carrier into specialized segmented service delivery

• Considerable growth potential in three specific air freight segments– Perishables (Seafood, fresh food)– Healthcare & Pharmaceuticals– E-Commerce trade parcels

• Growing Asian demand for high quality Pharmaceuticals and European fresh food

• Growth of e-commerce trade with fast B2C/B2B deliveries globally

Revenue Optimization & CRM

74

• Growth of global belly capacity will result in excess supply of cargo capacity

• Professional Revenue management and pricing is a necessity to optimize cargo revenues

• Majority of Cargo Sales comes through GSA partners (60-70%)

• Global & Regional key account management and CRM focus increases


Growing cargo opportunity in Pharmaceuticals

• Belgium and Germany are driving Pharmaceutical export growth in Europe

• Global sourcing and distribution of Pharmafavours Air Cargo


Source: Seabury

Differentiated product strategy balances flows and enables growth in higher value shipments

76

• Differentiated product strategy balances freight flow directionality and enables growth in specialized, higher value freight exports, especially perishables and pharmaceuticals

• Finnair Cargo specializes in niche traffic flows/services forecast to grow during strategy period: European Perishables & Pharmaceuticals

• Brussels was chosen as a new cargo hub due to its geographical potential and fast growth in pharmaceutical export shipments


Brussels cargo hub increases revenue by +35%


April 2013Start of Brussels cargo hub

October 2013

2014

Target of1 MEUR monthly belly contribution

by 2015

150-200 tonnes weekly to/from BRU cargo hub to Asia

• Total revenue to/from Central Europe +35% after Brussels cargo hub launch

• Currently accounts for more than 20% of Finnair Cargo’s total revenue (approx. 50 MEUR p.a.)

• Finnair is larger than Cathay Pacific, China Airlines & China Eastern Cargo in German exports

• Finnair is now 20th

largest export carrier in Belgium

April 2013-March 2014

Finnair Tonnage

Change, % y-o-y Rank

Belgium 2,529 252 % 20

Germany 10,941 20 % 28

We are set to leverage growth opportunities in Asia• Specialising in high value, growing niche

traffic flows/services • Enhancing revenue optimisation and CRM

capabilities• Increasing cost efficiency through

automation and outsourcing• Investing in feeder growth & infra to support

growing volumes

Supporting Finnair’s goal to double Asian revenues by 2020


80

Fleet and funding strategy

Solid foundation for growth

Erno Hildén, CFOFinnair Capital Markets Day, 22 May 2014



Fleet and funding strategy

All-Airbus fleet delivers operational efficiency

829 AIRBUS A319Avg. age 12.7 years





29 narrowbodies

Ow

ned

/ F

inan

ce le

ased

15 widebodies


Airbus 350 XWB anchors long-haul growth plans

Finnair is the first European carrier to receive next generation Airbus 350 XWB’s• A340 replacements with superior cost performance• Capacity growth also for congested Asian airports

Competitive advantage:• 20% more capacity: approximately 40 additional seats with lower trip cost• Estimated seat cost advantage up to -30% compared to Airbus 340*• Improved revenue position with superior product• 11 orders and 8 options


*Airbus estimate

A350: Lower costs, more passengers

84

Operational cash out expenses per seat, per year / normalized traffic

Estimated aggregate annual cash seat cost savings of c. 10MEUR per aircraft


*Airbus estimate

Business cabin convertibility adds flexibility

Front Business compartment Flex compartment

85

Convertibility allows +/- 10% capacity adjustment


Current order book facilitates growth

86

Long-haul fleet plan

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

0

5

10

15

20

25

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Wid

ebo

dy

AS

Ks

(mill

ion

s)

Nu

mb

er o

f ai

rcra

ft

13

15 15 15 15 1516

1718

19 20


Short-haul fleet plan: under review

• The optimal solutions for the Finnair European feeder network are driven by:– Finnair network characteristics and bank structure– Finnair’s cost position in European traffic– Use of partners

• Finnair’s A320 fleet is approaching mid-life– Synergies from combining short and long haul operations with single type rating requirement– Future short-haul capacity decision to be made during next 18-24 months– Further investment in short haul capacity requires competitive cost position

• Flybe already operating 1/3 of Finnair network flights– FlyBe operating Embraer regional jets and ATR turboprops


Finnair funding strategy: liquidity, flexibility

Positive operational cash flow• Ability to produce positive operational cash flow

even through the most challenging years in the industry*

Strong credit with additional debt capacity

• The current low indebtedness facilitates higher leverage potential by utilizing new aircraft as collateral

• Current asset base mostly unencumbered

Maintaining high liquidity through the cycle

• Target cash-to-sales 15-20%• 5-year senior bond with competitive margin• Undrawn 180 MEUR revolving credit facility• Commercial paper program provides additional

liquidity, if needed

Hedging strategy and funding diversification

• Duration diversification to minimize short and mid-term volatility of jet fuel and F/X

• Diversified funding base to secure availability and low cost of funding

88

*2009 has been the only exception since 1997


0

200

400

600

800

1000

1200

1400

1600

2014 Q2‐Q4 2015 2016 2017 2018

New aircraft investments require capital11 Airbus 350 XWBs on firm order*

Aircraft investments and loan repayments 2014 – 2018, MEUR

Cumulative outflow2014 – 2018, MEUR

89

Committed financing of ~MEUR 300 by Q4/15

0

50

100

150

200

250

300

350

400

450

2014 Q2‐Q4 2015 2016 2017 2018

Aircraft investments (incl PDP)Loan repayments

*Finnair also has options for an additional 8 A350s© Finnair | Capital Markets Day, 22 May 2014

Funding plans optimize cost of capital

• Finnair’s current aircraft financing portfolio• Secured financing• Earlier generation ECA covered finances• Aircraft operating leases• Japanese operating leases with call option (JOLCO)

• The targeted future financing mix • Secured financing (loans and finance leases)• Japanese operating leases with call option (JOLCO)• Aircraft operating leases

• Strong appetite to overweight the on-balance-sheet option for the A350XWBs because;

• Very attractive purchase price for the A350s• Strong debt capacity enables further leverage• New generation of long haul aircraft with strong residual value outlook


Strong financial position supports business development and future investmentsStrong cash positionMEUR

-150

0

150

300

450

600

2010 2011 2012 2013 Q1_2014

Net cash flow from operationsInvestments, grossShort term cash and cash equivalents

Strong balance sheet%

91

0

20

40

60

80

100

120

2010 2011 2012 2013 Q1_2014

Equity ratio Gearing Adjusted gearing


Finnair indebtedness among the lowest in the sector

92

Adjusted gearing on selected European carriersFY 2013 – Finnair accounting principles

*) Includes IAS19 restatement & Preference Share Issue

0%

100%

200%

300%

400%

500%

600%

Norwegian AF-KLM SAS*) IAG AY Lufthansa


Additional debt capacity from owned fleet

93

Total Fleet: 77 aircraft*

*Aircraft owned or leased by Finnair**As of March 31, 2014

49% unencumbered

51% leased & encumbered

Total book value: €1bln, of which 65% unencumbered**


Recent fleet transactions well-received

• Sale and leasebacks of three Airbus 330 aircraft and one A321 Sharklet aircraft completed during Q1/2014– Sale and leaseback of the fourth A330 aircraft to be completed in Q2 2014

• In addition, Finnair agreed on the sale and leaseback of two A350 aircraft in Q1 2014• Sale and leaseback agreement for the fifth A321 Sharklet aircraft completed in Q2, all five

financed with SLBs• MoU on the sale of three E170 aircraft announced in Q2, expected closing in H2/2014

– Divestment of non-core assets to continue

• The financial arrangements of A330 and A350 aircraft relate to Finnair’s long-haul fleet renewal program• Total value of A330 and A350 arrangements 430 MEUR

• In Q1, a loan of 107 MEUR from the European Investment Bank was repaid



Closing the revenue and cost gaps –Reaching 6% operational EBIT

Unit costs down by 14.1% since end of 2010...

5,07

4,36

-4,0%

-3,9%

-2,0%-1,5% -1,2% -1,2% -1,1% -0,6% -0,6% -0,1% 0,0%

2,4% -14,1%

4,04,24,44,64,85,05,25,45,65,86,0

* Includes purchased traffic from Flybe

96

Bridge to Q1 2014 CASK€ cents / ASK


...across most cost categories

97

RASK & CASK DevelopmentAirline business, % change 2013 vs 2010

-9,4-11,5

-17,9-17,1

-3,8-20,7

-8,429,6

-12,5-2,1

0,3

Other ExpCatering

Ground HdlgMx

Traffic ChargesDepr. & Lease Exp

Staff CostsFuel

CASK (ex-fuel)CASKRASK

© Finnair | Capital Markets Day, 22 May 2014%

Asian traffic forecast to grow with wide body fleet

0

5 000

10 000

15 000

20 000

25 000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Far East Asia trafficMillions of ASKs


...as are revenues from Asian traffic,targeting doubling the revenue from 2010

99

Total revenues from Asia trafficMEUR

0

500

1 000

1 500

2 000

2 500

2010 2011 2012 2013 2014* E 2015 2016 2017 2018 2019 2020


* Based on guidance given on 7 May 2014:”Finnair estimates 2014 turnover to be close to 2013 level.”

6% EBIT margin target well within reach-4

,0 %

-2,5

%

0,0

%

0,0

%

0,0

%

0,0

%

-0,1

%

-0,5

%

0,3

%

0,3

%

0,3

%

0,3

%

2,0

% 1,0

%

1,0

%

1,0

%

1,0

%

1,0

%

-0,1

%

-3,0

%

-3,5

%

-3,5

%

-3,0

%

-4,0

%

2015 2016 2017 2018 2019 2020

Total CASK Change CASK ex-fuel change FEA RASK change Other RASK change

Improvement in RASK and CASK, 2015-2020

EBIT margin 4,0% 6,0% 6,0% 6,0% 6,1% 6,1%


Summary and conclusions – fleet and funding• Finnair is targeting doubling its Asian revenues by 2020 and is gearing up with the A350XWB

investment program with 11 firm orders and options for 8 additional aircraft to provide the necessary growth

• Finnair is among the least-levered airlines in Europe, with additional debt capacity provided by a strong balance sheet, an attractively-priced orderbook for the A350XWBs, and the cash generated by our strong position in Asia-Europe traffic

– Nonetheless, the majority of the A350XWBs are planned to be taken on balance sheet

• Solutions for European feeder network to be decided based on:

– Bank structure

– Relative cost position of the European platform

– Partnerships© Finnair | Capital Markets Day, 22 May 2014101

Summary and conclusions – Profitability

• Our renewed commercial strategy aims to close the fair share revenue gap of MEUR 80

• Finnair is well-positioned with its Asian strategy and already established in all the most important markets

• Finnair will enjoy a competitive advantage from being the first European carrier to take delivery of the A350

• Our cost savings programme is one of the most ambitious in the sector and we remain committed to deliver the targeted results by end of 2014

• The financial target on 6% operational EBIT is unchanged and reachable by successful implementation of our strategy


Finnair is committed to delivering on strategy• Competitive cost structure and cost

savings

• Topline growth & closing the identified revenue gap

• A350s entry into service

• Growth by building on our existing strengths


Growth2016

2014Cost

savings

Revenueenhancement A350s

2015

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