FINNAIR Q1 2017RESULT

28.4.2017PEKKA VAURAMO,

CEO PEKKA VÄHÄHYYPPÄ,

CFO

Revenue grew and result continued to improve

• Revenue* grew 4.1% - China, Korea and domestic traffic the biggest contributors.

• Number of passengers grew 4.1%; we flew with fuller planes.

• Lapland drew visitors: +40.000 passengers in domestic traffic y-o-y

• Ancillary and retail sales per passenger grew and was 13 euros/pax

• Q1 comparable operating result -9M€ -10th consecutive y-o-y improvement in a row (-15 M€ Q1/16)

* Excluding SMT2

Comparable operating result, rolling 12 months by quarter

50

10

-40

20

0

-20

60

40

-50

70

-30

-10

30

Q1 17

Q3 14

-48

-36

6153

14

-24

Q1 15

Q2 15

-31

FY 14

FY 16

FY 15

Q3 15

Q1 16

54 55

37

Q2 16

Q3 16

24

Revenue, excluding SMT Capacity and traffic

Strong passenger revenue performance on flat capacity

Comparable operating result

Comparable operating result continued to improve: +41.2% y-o-y

+4,1%

Q1 2017Q1 2016

554532

Travel services -0.5%Cargo -1.2%

Passenger revenue +4.6%Ancillary and retail revenue +13.9%

+41.2%

Q1 2017Q1 2016-15

-9

2,06.0007.000

01.000

4.0003.000

5.000

2,5

2.0001,0

0,0

0,5

9.0008.000

1,5

3,08.128

6.617

8.121

Q1 2017

6.400

Q1 2016

+0,1%

Capcity (ASK) + 0.1%Traffic (RPK) +3.4%Passengers +4.1%

Pax, mill.ASK, mill.

Strike actions at HEL airport caused close to 200 flight cancellations during the period

PLF 78.8%

PLF 81.4%

3

Passenger revenue, M€

• Asia +6.9%• North Atlantic -11.6%• Europe +3.4%• Domestic +7.2%• Total pax revenue +4.6%

Passenger load factor, %

4

Q1: Nordics drew visitors, Asia, Europe and domestic driving revenue growth

• Asia +4.8% -p• North Atlantic -2.2% -p• Europe +1.4% -p• Domestic -1.5% -p• Total +2.6% -p

Capacity (ASK), mill. km

• Asia -0.3%• North Atlantic -4.1%• Europe -0.3%• Domestic +11%

100

150

0

50

200

161

23

Domestic

49

Europe

166

North Atlantic

52

Asia

176165

26

Q1 2017Q1 2016

468

Europe

2.9912.999

North Atlantic

Domestic

606 519

4.021

632

Asia

4.01179

71748083 81

707678

88

DomesticEuropeAsia North Atlantic

Total

Work on enabling growth continued

• Wet lease on the Miami route until May; then Miami discontinued until autumn. Two wet leased A321’s to be replaced with own, new A321’s

• A new A350 simulator and a future narrow body simulator will enhance pilots' training

• Recruitments continue: pilots, cabin crew, digital experts, customer service.

• 20 M€ cost efficiency program will be fully completed and on time

5

A350 is yielding results

• 8 aircraft currently in use, 3 more to be delivered during 2017

• Customer satisfaction clearly improved, NPS 46%

• Regularity (98.9%) and tech Dispatch Reliability (97.5%) on a good level

• A350 has improved Finnair’s overall fuel efficiency: Fuel consumption per ASK -3.4%, per RPK -4.9%

• More passenger and cargo capacity

6

A350 is up to 25% more fuel efficient vs. the replaced A340 –aircraft

Growth accelerates – record breaking summer ahead

• 87 times a week to Asia in the summer

• Growing number of passengers: Over 40,000 passengers per day in peak summer days

• More capacity to favourite destinations in Europe and Asia for summer 2017:

• San Francisco and Reykjavik• Additions to Tokyo and Hong Kong• Record number of flights to China and

Japan

• More capacity to Lapland for winter 2017; 430,000 seats during November-April

7

18 destinations in Asia7 in Americas,over 70 in Europe

We develop our customer experience• Q1 Customer satisfaction excellent: NPS * 46%.

• Finnair Kitchen: In flight catering back to Finnair's own hands.

• Alipay rollout to all flights to China in in the summer; Ease of buying.

• Wi-Fi installations of the long-haul fleet are completed in May, installations to narrow body fleet will begin later this year.

• The mobile application and Finnair.com growing in popularity and increasing sales;• Ticket sales in Finnair's digital channels grew by

33% and ancillary and retail sales were up 24% from the comparison period.

8

Mobile app had 136,000 active users*, (+ 78%)

Finnair.com 2.3 million visitors / month* (+ 19%)

*Net promoter score, Q1/2016: 38 %, Mobile app and Finnair.com users in March 2017

Outlook unchangedOutlook 2017:• The demand outlook for passenger and cargo traffic in

Finnair’s main markets continues to involve uncertainty.• Finnair estimates that, in 2017, due to the fleet renewal

and introduction of new aircraft, its capacity will grow 8–10 per cent, weighted strongly towards the second half of 2017.

• Revenue is expected to grow more slowly than our capacity, reflecting increasing capacity in the relevant markets.

• In keeping with its disclosure policy, Finnair will issue guidance for its expected full-year operational result in connection with the half-year report 20 July 2017.

9

10

Finance

Q1 was 10th quarter of year-on-year profitability improvement in a row

11

• Passenger revenue grew by 19 MEUR, as a result of clearly improved outlook especially in Asian and European traffic from a weak comparison period.

• Ancillary revenue grew by 4 MEUR, Economy Comfort seats sold particularly well.

• Revenue from Travel services & agency decreased mainly due to sale of SMT. • Fuel efficiency has improved due to fleet renewal and aircraft up gauging, fuel

spot price has increased, but hedging delays the impact.• Increase in other expenses mainly related to currency hedging items.• Depreciation: Mainly fleet renewal related, change from A340 to A350.• Growth: additional costs from recruitment, training and use of wet leases.

PY

26,92127,268

CY

+1.3%

CY

8,121

8,128

PY

+0.1%

2,501

PY

+4.1%

CY

2,604

RASK

CYPY

162EUR / PAX

+0.5%

162EUR / PAX

+2.6pp

78.8

CY

81.4

PY

+9.4%

11.9EUR /PAX

CYPY

13.0EUR /PAX

CY

6.82

+3.3%

6.61

PY

PY CY

-2.9%

32.0KG

32.9KG

1.22EUR /TON

1.20EUR /TON

PY CY

+1.7%

FLIGHTS ASK, mill

PAX, 1000 Avg. Fare1 PLF, %

Ancillary REV Cargo, mill Cargo REV

PY= Q1 16, CY= Q1 17, 1) Passenger revenue/number of passengers

+6.3

Q1 EBIT ACT

-9.0

Other (NET)

-5.1

Travel Services -0.3 & Agency -4Cargo -0.5Ancillary & Retail 4.1Passenger 18.6

Q1 EBIT PY

Depreciation

-6.2 -2.3

-10.9

RentsTraffic Other exp.

2.9

Fuel

10.0

Revenue

18.0

-15.3

Q1 2017 Passenger revenue vs. Q1 2016 Q1 2017 Other revenue items vs. Q1 2016, excluding SMT

12

Revenue grew on the back of improved load factors and solid performance in Asian and European traffic

Yield, mix, other

PLF (load)

FXASK Q1 ACTQ1 PY

4.1

3.4404.0

11.0

422.62.5

-3.0

404.0

11.4

North Atlantic

AsiaQ1 PY

+18.6

Q1 ACT

422.6

5.5

Unallo-cated

3.5

Domestic

1.2

Europe

Total ASK (%) PLF (pp) Yield1 (%)Δ to PY 0.1% 2.6 1.2%Q1 ACT 81.4%Q1 PY 78.8%

Δ to PY FEA ATA EUR DOMASK (%) -0.3% -4.1% -0.3% 11.0%PLF (pp) 4.8 -2.2 1.4 -1.5Yield1 (%) 1.3% -5.2% 1.7% -1.4%RASK (%) 7.2% -7.8% 3.7% -3.4%

59.1

39.6

Q1PY

29.7128.4

Ancillary & retail revenue

131.8

58.839.2

33.8

Travel services

Cargo

-0.5 -0.3

4.1

Q1 ACT

+3.4

Travel services

Ancillary and retail revenueCargo

Bond issue increases loans and cash, adjusted gearing remains conservative at 84.1%

• Liquid funds increased to 887.5 million euros• Interest bearing debt increased due to new 200 M€ bond issue,

old partially prepaid (85 M€)

Positive operating cash flow due to improved result and increased sales

13

Balance sheet and cash flow

• Investments consist of one final payment of E190 aircraft plus maintenance investments for owned fleet

Equity817,5

Other assets451,1

31 Mar 2017

HFS 131,12.649,9

Der. 26,8

IB debt815,1Der. 121,4

2.528,7

733,0

139,3

877,1

103,3 366,8

82,5

1.048,7

31 Mar 2016 31 Dec 2016

797,3

176,6

2.178,7

Fleet1.058,8

382,9Cash887,5

857,0

31 Mar 2016

380,0

31 Dec 201631 Mar 2017

466,8

2.178,7

479,8

2.649,9Other

liabilities513,5 580,4

348,5

Unflowntickets476,9

2.528,7

25,2

709,1

717,7 143,0

+272.4 M€

Investing+145.1M€

Financing+103.4 M€

Loan

pro

ceed

s

Oth

er

186.7

650.8

Disp

osals

Inve

stmen

ts

-41.9

Oth

er

-0.8

Wor

kinng

capit

al

0.419.1

Cash

201

6*

5.5

199.3

EBIT

DA

378.4

Operating23.9 M€

Cash

Q1*

Loan

pay

men

ts

-95.9

*Cash excluding commercial papers of over 3 month maturity

3 new A350 and 5 A321 aircraft to be delivered during 2017*

• Capacity growth to pick up in Q2 with new aircraft deliveries:• 8th A350 delivered in April, 3 more to be delivered

during 2017• 2 A321 aircraft delivered in Q1, 5 more to be

delivered during 2017 • Aircraft returns: All remaining A340 aircraft to be sold

back and returned to Airbus during 2017, one A319 returned after lease expired in Q1, two A321 aircraft to be returned in Q2 (wet leases)

• Net additions in 2017: 3 widebody aircraft and 4 narrow body aircraft

Net investment commitments 457 M€ 2017-2019

14

Capacity growth will pick up from Q2 onwards with new aircraft deliveries

M€

*2017 new deliveries in total: 4 A350’s and 7 A321’s

050

100150200250300350400450500

Q2-Q4 2017 2018 2019 2020 2021 2022 2023

Planned Investments Net investments (divestments)

SLB + other divestments Axis

THANK YOU

Contact us:IRO Kati Kaksonen+358 9 818 2780firstname.lastname@finnair.com

Income statement

in mill. EUR Q1 2017

Q1 2016

Change %

2016

Revenue 554.4 536.4 3.3 2,316.8Other operating income 20.2 22.1 -8.5 75.5Operating expensesStaff costs -90.5 -91.9 -1.4 -362.5Fuel costs -111.6 -121.6 -8.2 -491.5Other rents -44.4 -42.1 5.4 -167.4Aircraft materials and overhaul -35.6 -36.6 -2.7 -147.3Traffic charges -58.2 -61.1 -4.7 -262.8Ground handling and catering expenses -66.9 -65.1 2.7 -258.9Expenses for tour operations -28.6 -26.9 6.4 -87.8Sales and marketing expenses -17.5 -18.1 -3.2 -76.9Other expenses -71.2 -58.8 21.0 -266.6Comparable EBITDAR 50.1 36.4 37.8 270.4Lease payments for aircraft -30.0 -28.8 4.3 -109.5Depreciation and impairment -29.1 -22.9 27.1 -105.8Comparable operating result -9.0 -15.3 41.2 55.216

Revenue Comparable operating result

17

Revenue and comparable operating result development

600550

400

200150

350

650

450

250

10050

500

0

300

Q3 Q4Q2Q1

622544521

570536 568641

570554

2016 20172015

70

60

40

30

20

10

0-10

-20

50

-30Q3Q2 Q4Q1

3 1-13-9

64

-152

-28

66

20172015 2016

• Q1/16 hedging loss 45,1 mEUR• Q1/17 hedging profit 0,1 mEUR

18

Fuel costs decreased despite spot price increaseImproved fuel efficiency with fleet renewal and aircraft up gauging

122 112

-3-4535

3

0

20

40

60

80

100

120

140

160

180

2016Q1 Volume Price Currency Hedging deviation 2017Q1

mEUR

%- share of operating costs (584 mill. Eur. in Q1) Fuel hedges as of 31 March 2017

19

Fuel the single largest cost item

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%hedge ratio

upper

lower19 %

16 %

16 %10 %

11 %

12 %

8 %3 % 5 %

Fuel Staff

Leasing, maintenance, depreciation & impairment Traffic charges

Groundhandling & catering Other costs

Other rents Sales & marketing

Tour operations

Hedging, currencies and sensitivities

Fuel sensitivities 10% change Hedging ratio(rolling 12 months from date of financial statements)

without hedging with hedging H1/2017 H2/2017

Fuel EUR 47 million

EUR 23 million 73 % 70 %

Currency distribution 1–3 1–3 2016 Currency sensitivities Hedging ratio for operational cash flows % 2017 2016 USD and JPY

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

(rolling 12 months from date of financial statements)

Sales currencies 10% change without hedging

10% change with hedging

EUR 61 62 56 - -USD* 3 3 4 see below see below see belowJPY 7 6 9 EUR 20 mill. EUR 10 mill. 70 %CNY 5 5 7 - -KRW 3 2 3 - -SEK 6 5 5 - -Other 15 17 16 - -Purchase currenciesEUR 57 55 54 - -USD* 35 37 38 EUR 54 mill. EUR 17 mill. 71 %Other 8 8 8

20* 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.