Back in Black

Erno Hildén CFO

1 Capital Market Day, 3 Dec 2012 Improved business performance in Jan – Sep 2012...

Operational EBIT build-up Jan – Sep 2012 M€ 250.0

11,0 -1,7 200.0 11,1 11,5 -18,1 -19,3 150.0 20,6 -21,1 22,7

100.0 -96,3

147,7 50.0

38,6 0.0 -29,3

-50.0

2 Finnair Capital Market Day, 3 Dec 2012 ...driven by increased traffic and unit revenue improvement • Unit revenue per available seat kilometre (RASK) up by 8.7% in Jan-Sep 2012 as both passenger load factor (PLF, +4.5%-p) and yield per revenue passenger kilometre (RPK yield, +2.2%) improved y-o-y

Q3 RASK +8.7%

PLF RPK yield +4.5%-p +2.2%

3 Finnair Capital Market Day, 3 Dec 2012 Implementation of €140 million restructuring and cost savings program ahead of target

Target €140 million Savings progress to €140 2% million target 8% 25% TOTAL 57% 43% 8% maintenance 26% 74%

9% staff 43% 57%

other 102%

10% lease 105%

24% sales 109% 14% catering 148%

maintenance staff ground handling 38% 62% other lease sales catering fuel 155% ground handling fuel 0% 100%

4 Finnair Capital Market Day, 3 Dec 2012 New €60 million savings programme will ensure reaching our target of 6% operational EBIT margin

• The aim is to achieve a permanent reduction in costs of €60 million by the end of 2014

• The new programme complements the existing €140 million structural change and cost reduction programme launched in 2011

Savings timeline for in total €200 million sustainable savings from 2010 cost

2012 2013 2014 2015

€90 million €50 million

€60 million

5 Finnair Capital Market Day, 3 Dec 2012 Hands-on approach to drive our costs down

• Dedicated project organisation and well defined responsibilities and timelines for each savings initiative

• Regular Executive Board level monitoring of advancements

• All Executive Board members and persons responsible for initiative implementation are incentivised in achieving the targets

• 9 Program streams and over 200 savings initiatives in total

6 Finnair Capital Market Day, 3 Dec 2012 Our financial targets

• Operational profit (EBIT) margin 6% – over €120 million in the coming few years • EBITDAR margin 17% – over €350 million in the coming few years • Economic profit – To create positive value over pretax WACC of 9.5% • Adjusted gearing <140% • Dividend policy pay-out ratio minimum one third of the EPS

7 Finnair Capital Market Day, 3 Dec 2012 The path towards our profitability target

Continuous Improved Revenue New Capital unit cost productivity maximi- product efficiency reduction and quality zation offering and strong (ex. fuel) balance sheet • Fixed cost • Fleet and •New leverage network destinations optimisation through •Next growth and • Operational generation outsourcing quality top 350 class XWB

8 Finnair Capital Market Day, 3 Dec 2012 Finnair fleet and future investments

9 Finnair Capital Market Day, 3 Dec 2012 Strong financial position supports business development and future investments

Strong balance sheet Good cash position over years % M€ despite significant investments 120 750

100 600

80 450 60 300 40

150 20

0 0

-20 -150 2008 2009 2010 2011 09/2012 2008 2009 2010 2011 1-9/2012

Equity ratio Net cash flow from operations Gearing Investment, gross Adjusted gearing Short term cash and cash equivalents

10 Finnair Capital Market Day, 3 Dec 2012 Fleet renewal is key for successful strategy implementation – leads to reduced unit costs and improved fuel efficiency

• First phase in 2008-2010 – In Long haul, MD11 fleet replaced with Airbus 330/340

• Second phase in 2012 Harmonized – Reducing 9 aircraft from European fleet Airbus fleet – Embraer traffic transferred to Flybe brings asset and crew utilization • Third phase in 2013-2014 benefits – fleet to be replaced with Airbus A321 ERs

• Fourth phase from H2 2015 – Airbus 350 XWB, partly to replace current A340s, partly to increase capacity

11 Finnair Capital Market Day, 3 Dec 2012 Finnair invests in new technology

Gross cash flows totalling €1.2 billion M€ 400 • 5 Airbus 321 ER and 11 Airbus 350 350 XWB aircraft 300

250 • Net effect of investments is

200 materially lower – lease expiries for current aircraft 150

100

50

0 2013 2014 2015 2016 2017

12 Finnair Capital Market Day, 3 Dec 2012 We have several funding sources available for aircraft investments secured by aircraft as collateral, loan to values 70-100% depending on the vehicle

In the long-run, owning aircraft is Asset Export the most cost- backed credit efficient way to loans finance fleet.

Finnair’s strategy is >50% (Japanese) Asset ownership of the operating backed core fleet lease bonds

13 Finnair Capital Market Day, 3 Dec 2012 We can finance investments with our increasing debt capacity

Unencumbered 9/2012 Encumbered 9/2012 Unencumbered 12/2013 Encumbered 12/2013

12 12

10 10

8 8 7 8 3 3 6 6 3

4 4 2 4 2 7 2 6 5 5 5 5 2 4 4 4 2 4 4 3 3 3 22 0 0 A-319 A-320 A-321 A-330 A-340 E170 E190 ATR-72 A-319 A-320 A-321 A-330 A-340 E170 E190 ATR-72

• Currently 26 unencumbered aircraft = 68% of the total fleet value of €1.05 billion • In 15 months 35 unencumbered aircraft

14 Finnair Capital Market Day, 3 Dec 2012 Our funding strategy is to use different funding sources to ensure the lowest total funding cost with maximum operational flexibility and continuity

• Fleet investments through secured financing, unsecured loans for refinancing and flexibility – Commercial paper programme of €200 million, €61 million outstanding. – Revolving credit facility of €200 million expires in Q2/2013. Unutilized, last time of utilisation 2002. Only facility with a covenant.

• Other potential funding sources – Non-core fleet sale and leasebacks – Asset optimization – Pension loan – Senior unsecured bond

15 Finnair Capital Market Day, 3 Dec 2012 We have a balanced loan maturity profile

Maturing loans in total €598 million M€ Guarantee facility 200 (backed by mortgaged 4*A330) to be renewed, 175 the underlying EIB loan expires in 2019 150 89

125

100

75 134 131 50 101

25 54 53 35 0 10‐12/2012 2013 2014 2015 2016 2017=>

16 Finnair Capital Market Day, 3 Dec 2012 Our actual lease liabilities are lower than reported due to expiring lease agreements

Lease commitments, in total €186 Aircraft operating lease liabilities million Lease liability based on formula M€ (7*annual rentals) 80 600 70 500 60

50 400

40 300

30 200 20 100 10

0 0

Operating leases are off-balance sheet liabilities. When capitalised using the common method of 7*annual aircraft lease payments, the adjusted gearing on 30 Sep 2012 is 90.1%. 17 Finnair Capital Market Day, 3 Dec 2012 Finnair has the strongest balance sheet in the Nordics

Key ratios as of 30 September 2012 >400% % 200

175

150

125

100

75

50

25

0 Equity ratio Gearing Adjusted gearing

Finnair SAS Norwegian

• Norwegian adjusted gearing >400% • Pension liabilities excluded from SAS adjusted gearing

18 Finnair Investor Presentation - Nov 2012 Summary

• Profitable Q3 result

• Cost savings are progressing as planned

• We have a strong balance sheet

• Finnair will be the first European airline to fly new A350s in long haul traffic

• We have a good funding position to finance future investments

19 Finnair Capital Market Day, 3 Dec 2012