Annual Review 2006

Home , Aero Airlines, Flight number, Kaleva (airplane), Suvarnabhumi Airport

CONTACT INFORMATION

Finnair Plc Helsinki-Vantaa Airport Tietotie 11 A FI-01053 FINNAIR

Switchboard +358 9 818 81 www.finnair.com www.finnair.com/group

Senior Vice President Communications Christer Haglund Telephone +358 9 818 4007 Fax +358 9 818 4092 [email protected]

Senior Vice President and CFO Lasse Heinonen Telephone +358 9 818 4950 Fax +358 9 818 4092 [email protected]

Director, Investor Relations Taneli Hassinen Telephone +358 9 818 4976 Fax +358 9 818 4092 [email protected]

Investor Relations Telephone +358 9 818 4951 Fax +358 9 818 4092 [email protected] 2006 The 2006 annual report is intended to be a travel guide into the world of Finnair. We are a reliable airline, we have a comprehensive route network and we provide fi rst class service. Our customers are satisfi ed.

We realised in time the growth potential of Asian traffi c and got down to work in the company. We could tell people how good our connections are via Helsinki from Europe to Asia and vice versa.

A map of Asia and new aircraft. This is good material for a travel guide. Shall we continue with these themes?

Christer Haglund, SVP Communications and Jukka Hienonen, President and CEO Indeed. We have already achieved our vision “Best in Northern Skies, European Excellence”. Now we will empha- sise our role in traffi c between Europe and Asia.

CONTENTS

Information for Shareholders ...... 4 Absolutely. We have a story Key Figures 2006 ...... 4 of strong growth to tell. Invest in Finnair ...... 6 We must remember to mention Traffi c Information and Fleet ...... 7 that we are in strong shape Review by the President & CEO ...... 9 fi nancially, as we start to On Finnish Wings to the Ends of the Earth ...... 10 invest in a new Asian fl eet. Europe’s Fastest Link to India ...... 13 The Welcoming Warmth of Thailand ...... 15 Nagoya – A Third Destination in Japan ...... 17 Daily to Exhilarating Shanghai ...... 19 Finnair’s Success Factors...... 20 Finnair and Society ...... 22 Let’s do that. I, for one, have complete faith in this. Scheduled Passenger Traffi c...... 24 Leisure Traffi c...... 25 Travel Services ...... 26 Aviation Services ...... 27 Board of Directors and Auditors...... 28 Group Management ...... 30

The Financial Report 2006 is published separately 2006 INFORMATION FOR SHAREHOLDERS

The Annual General Meeting of Finnair Plc will be Depository Ltd, or who are holders of nominee-reg- Financial informatioN Changes of address held on 22 March 2007 at 3 pm at the Helsinki Fair istered shares and who on 12 March 2007 are tem- In the financial year 2007, interim reports will be pub- Shareholders are kindly requested to notify any Centre, Messuaukio 1, Congress Wing Entrance, porarily entered in the register of shareholders in lished in Finnish, Swedish and English: changes of address to the custodian of their book- Hall C1. the manner specified in Chapter 4 Article 2 of the Q1 (1 January – 31 March 2007) 4 May 2007 at 9 am entry account. Companies Act, are entitled to attend the AGM. Q2 (1 January – 30 June 2007) 9 August 2007 at 9 am Notice of attendance at the Annual General Meet- Shareholders whose shares have not been trans- Q3 (1 January – 30 September 2007) 1 November 2007 ing (AGM) must be given at the latest by 4 pm on 20 ferred to the book-entry system are not entitled to at 9 am March 2007. Notice of attendance can be given by post attend the AGM. to the address Finnair Plc, Share Register HEL-AAC/5, Ordering the Annual Report FI-01053 FINNAIR, by fax to +358 9 818 1662, by Board of Directors’ Proposal The Annual Report 2006 will be published in print telephone from Monday to Friday 9 am–4 pm to on the Dividend in Finnish, Swedish and English in week 9. Orders: +358 9 818 7637, or by e-mail to [email protected]. According to the financial statements on 31 Decem- tel. +358 9 818 4904, fax. +358 9 818 4401, e-mail: Letters, faxes or e-mails regarding notice of attend- ber 2006, the distributable equity of Finnair Plc [email protected] ance must have arrived before the period of notice amounts to 270.8 million euros. The Board of of attendance ends. Directors proposes to the Annual General Meet- ing that a dividend of 0.10 euros per share be dis- Electronic Annual Report Shareholders who are entered at the latest by 12 tributed, a total of 8.9 million euros, and that the The electronic Annual Report will be published on March 2007 in the Company’s register of share- remainder of the distributable equity be carried the internet in Finnish, Swedish and English at the holders maintained by the Finnish Central Securities over as retained earnings. address www.finnair.com/2006.

KEY FIGURES 2006 FINNAIR GROUP KEY FIGURES

2006 2005 2004 2003 2002

Net sales EUR million 1,990 1,871 1,683 1,558 1,656 Operating profit (adjusted), EBIT* EUR million 11 70 25 -41 24 Operating profit (adjusted)*, % turnover % 0.6 3.7 1.5 -2.6 1.5 Operating profit, EBIT EUR million -11 82 31 -19 60 Result before taxes EUR million -15 88 31 -22 54 Unit revenues on flight operations cents/RTK 74.0 73.7 71.0 80.1 88.1 Unit costs on flight operations cents/ATK 46.1 45.3 50.7 58.7 63.1 Earnings per share EUR -0.16 0.73 0.30 -0.19 0.43 Equity per share EUR 6.77 7.73 6.97 7.24 7.58 Gross investment EUR million 252 58 115 82 102 Interest-bearing net debt EUR million 43 -155 -24 -18 20 Equity ratio % 37.2 42.2 40.2 44.4 44.3 Gearing % 7.1 -25.1 -3.1 -2.9 3.1 Adjusted gearing % 112.8 66.8 102.5 102.7 82.0 Return on capital employed (ROCE) % -0.1 11.1 6.1 0.0 7.6 Average number of employees 9,598 9,447 9,522 9,981 10,476 * excluding capital gains, arrangement expenses and changes in fair value of derivatives Key Figures 2006 06 06 06 05 05 05 S E 04 04 04 G 03 TAX 03 03 E ARIN 02 02 02 GE FOR R LOAD FACTOR E D E GE 0 0 % % N 40 80 60 20 75 80 40 80 60 20 65 70 60 55 50 -20 -40 LT LT B ST 100 100 120 E 100 100 U U S E EUR mill. PASS R ADJ

5 4 3 2 1 0 -1 -2 -3 %

06 06 06 % of turnover RS 05 05 05 costs

GE 04 04 04 N Domestic International E and 03 03 03

s Unit costs, c/ATK costs, Unit Unit revenues, c/RTK revenues, Unit 02 02 02 ue BIT* n excluding capital gains, fair value fair gains, capital excluding changes of derivatives and arrangement arrangement and derivatives of changes expenses E

e * *

D D v R OF PASS E 6 5 3 2 0 9 8 7 4 1 e 0 4 2 0 % E -4 -6 -8 -2 80 60 40 20 r -12 -14 -16 -10 -40 -20 -60 B 100

ST U Change UM EUR mill. Unit N mill. passengers ADJ D E S E TR 06 06 06 PLOY ME 05 05 05 EM 04 04 04 Domestic International KILO 03 E 03 03 02 02 02 R TONN E UE 0 4 8 6 2 0 % -2 00 12 10 RN ON CAPITAL N 800 400 500 E U 1,600 1,600 1,200 2,000 1,500 1,000 2,000 2,500 RNOV T V E E EUR mill. U R mill. tnkm T R baggage tag number tag baggage tells which printer has printer which tells Finnair flight number flight Finnair booking reference booking Shanghai, Pudong AirportPudong Shanghai, printed the tag theprinted PVG = PVG = AY057 = PNR = TAG:3105717966 = PRT:0892 -

. profitability and S world. Cooperation Cooperation world. a functioning working functioning a UE one SS L E E AND VAL SPONSIBILITY E SIN E R D U E U -B RSONN E LT TS E U GE ON TWORK SOCIAL R G NT C E E SSIONAL P GEME E RBLY N E P ANA U PROF asset an is force work committed and motivated skilled, professionally A job the workspromote toFinnairactively highly. Finnairvalues that operating changing rapidly a staffin of competence and satisfaction environment. Personnel structure is developed in accordance with implementationsupport the schemes Incentive objectives. business strategy. Group’s Finnair of CORPORAT society of structures the part of as responsibility its recognises Finnair and as a long-term actor in Finland and its main market areas. An open, responsible and active environmental policy is a permanent for evident, is which – business doing of way company’s the of feature Finnair aircraft acquisitions. positive environmentally our in example, projects. responsibility social participatesin also CAPITALISIN effeciencycost and Finnaircompetitiveness its improvingtaking is by advantage of opportunities provided by e-business in sales and cus service.tomer FINANCIAL TAR intention company’s the on based is financial targets of setting The per six a if reachedtarget is The value. added generateeconomic to more of level profit operating an namely margin, profit operating cent achieved. is euros million hundred one than M areFinnair’s valuesvalues. by managed is Finnair customer orientation continuous development, community, The values support and aid Finnair employees in the choices work.and daily their in make they decisions S airlines, quality of alliance the to belongs Finnair savings. cost and revenue extra as well as visibility worldwide Finnair brings network.its extendthat agreementsbilateral has also Finnair - - - - E safety, Finnishness, freshness ROP EU

TITION E in P M ALITY R U E IN CO Q G E AD ROWTH . They are timeless and distinguish Finnair from com E G

DIN G T L RVIC E E EE developing CC ARK U STRON sustai is objective Finnair’s business sector. growth a transport is Air market. travel Asian expanding rapidly the in growth profitable nable, Asia, and Europe between path flight main the on located is Helsinki which means that Finnair has Europe’s largest natural market area and years, five in tripled services have traffic. Asian Finnair’s Asian in it enables Finnair’sfleet moderncent. per 30 be will 2007 in growth growth. this realise to BRAND The areas. market main company’s the in strong is brandFinnair The communicate that dimensions into extended been have values brand the kind of airline that Finnair wishes to be and for what it wishes to be known. Finnair’s brand values are and petitors. Finnair is known as one of the most punctual and reliable industry. the in airlines M well as Finland from and transportto air in leader market the is Finnair growing a has through Finland. Finnair passing traffic gateway in as Asia. and Europe between traffic cargo and passenger in role S excellent an on based is environment competitive a in success Finnair’s is Finnair service. quality high and terms market on pricing network, various of use effective making by position competitive its strengthening and services new developing continually by and channels distribution products. travel TOP S ope is company the and high rated been has Finnair’sservice quality Europe.Finnar’sin rationallythebest of one the most tobe is goal desirable as a option provider of travel services. A customer loyalty comprehen and personal increasingly an provide to us enables scheme servicesits develops systematicallyFinnaircustomers.service to sive customers.from gathered feedback of basis the on INVEST IN FINNAIR

Finnair Technical Services Technical Finnair handling) (ground Oy Northport Oy Catering Finnair Oy Finncatering Oy Management Facilities Finnair AVIATION SERVICES AVIATION Amadeus Finland Oy Finland Amadeus Oy Services Travel Finnair TRAVEL SERVICES TRAVEL (SMT) Ltd Bureau Travel Finland Ltd Estravel A/S Matkatoimisto Mikkelin Ltd Agency Travel Area Finnair Cargo Oy Cargo Finnair Oy Finance Aircraft Finnair SCHEDULED PASSENGER TRAFFIC PASSENGER SCHEDULED Traffic Passenger Scheduled Finnair Aero FlyNordic

Finnair Leisure Traffic Leisure Finnair Ab Ltd Suntours – Aurinkomatkat Oy LEISURE TRAFFIC LEISURE FINNAIR GROUP

Invest in Finnair Traffic Information and Fleet

Boeing MD-11

Airbus A321

Airbus A319

Embraer 170

ATR 72 (Aero)

Airbus A340

Boeing 757 Airbus A320

Embraer 190

Boeing MD-80 (FlyNordic) 7.6 0.7 0.0 5.9 5.2 4.4 8.3 12.2 12.5 15.7 18.4 57.8 71.9 2002 7,037 1,439 2,491 17,785 12,793 72,084 172,681 104,838 Average age 4 7 4 0 0 2 0 5 4 6 32 69.6 55.8 2003 1,470 2,636 6,849 12,971 73,416 18,644 113,892 172,884 Leased 6 0 6 1 7 4 1 2 7 6 71.2 56.6 40 2004 8,149 3,162 1,791 21,907 15,604 86,245 121,027 196,795 Owned 57.0 72.6 2005 8,517 1,940 7 1 7 6 1 7 3,400 11 12 10 10 16,735 72 90,242 23,038 125,410 202,070 R 2006 Number E

B E 75.2 58.3 2006 2,100 3,602 8,792 EM

17,923 93,807 23,846 211,813 C 133,890 76 68 ANC E 123 100 295

Seats M 178–181 149–164 125–144 224–227 282–286 T 31 D RFOR E EE P FL U RO G

Flight kilometres (1,000) Passenger load factorPassenger % Overall load factor % Available seat kilometres. mill. Available tonne kilometres. mill. Revenue passenger kilometres.Revenue mill. passenger Flight hours Revenue tonne kilometres. mill. kg) Cargo and mail (1,000

Passengers (1,000) Passengers (1,000) Total Embraer 170 Embraer 190 72* ATR Boeing MD-82/83**

Boeing MD-11 Boeing B757 Airbus A340 Airbus A319 Airbus A320 Airbus A321 FINNAIR TRAFFIC P FINNAIR The average age of the fleet operated by the parent company’s Scheduled Passenger Traffic of the operatedThe average fleet age by Passenger the parent Scheduled company’s December 2006 was 5.6 years on 31 * The ATR 72 aircraft 72 are* The ATR operated Aero by Airlines ** The Boeing MD-80 series aircraft are operated FlyNordic by TRAFFIC INFORMATION AND FLEET

Review by the President & CEO

ASIA

EN ROUTE T

Justover a year ago Istepped into the captain’s shoes at Finnair. 2006 proved to be a transitionabe Finnair’syearin earnings development, manyandrepreinwaysit sentedpreparationa newdeparture.fora

We are purposefullyareWe building Finnairairlineintoan focused Europe-Asia on traffic. In this endeavourthisIn success.havekeysthetoweorganisation, Our fleet aboveand all our way of thinkingourwayof directedare fulfillingto this objective.

The locationThehomeflightourthebase of on path between Europebestthe is and Asia place in Europeplaceinimplementingfor chosenourstrategy. onwardForconnections, our Asianflights need extensivean route network Europe. in And have.this we

Finnair is the best option for the traveller who has no direct flight connection betweenEuropeWelcomeAsia.andHelsinki, to change wherecan youaircraft without pointlessdelays.expandingThe Helsinki-Vantaa pleasantAirporta makeplaceis to onwardconnections. Whether youtravellingare fromvicewesteastversa.orto

Theyear 2007 islooking good. This year weexpect toincrease our Asian traffic by a third. We are preparing ourselves for strong growth with a massive fleet mod ernisation. This spring we will acquire two new wide-bodied aircraft, and next yeartwo more. Atthe beginning ofthe next decade wewill have completelya new long-haul fleet. Our European fleet is already the most modern and efficient on the continent.the

Big investmentsBig require resources. thisForreasonnoware concentrating we prin cipally on profitability and financial performance. As we embark on these large projects,weaim tomaintain our financial health and an ability to steer an inde pendentcourse.

For a captain to succeed in his leadershipcaptainsucceedhissturdytoaexpert inneeds aFortasks, andcrewan he vessel.Successchangingin conditions requiressteadybelieve anerve, thereIbut to be no lack of thisamonglackofnobe Finnair wouldstaff. thankliketoIGroup’s the personnel for the contributionthefor theyhavewhatmadehavebeenindifficult conditions thefor airline industry. My gratitude is also due to customers and shareholders for the trustnewvoyage!theydate.ashowntoonJoin us us in

JukkaHienonen PresidentandCEO

profitability. improving our improving We are securing are We rowth must be must Growth urope and Asia and Europe tapped into now. into tapped business changes business Finnair’searnings require resources. resources. require >> Focusing on core on Focusing >> of structural change. change. structural of development – a year year a – development our ability to grow by by grow to ability our >> Capitalising on the on Capitalising >> opportunities in traffic opportunitiesin >> Massive investments investments Massive >> to be a transition year in year transition a be to Finnair. Finnair. structures. 2006 proved 2006 structures. drives decision-making in decision-making drives between between 10

ON FINNISH WINGS TO THE ENDS OF THE EARTH

The well-known Finnair brand creates In Finnair, safety is a fundamental positive images. Reliability is the best Finnish quality. outlook. The customer can relax. Promises are kept.

>> Brand values represent the compa- >> Safety, the most important >> A timetable is a commitment ny’s strategic intent. It’s important to criterion of Finnair’s operations, made to the customer. Punctuality set targets and to work purposefully to is apparent in the Group’s system- is one of the best Finnish virtues. fulfil them. Finnair’s brand values atic and consistent way of working. Finnair’s service means warm friend- are safety, Finnishness, freshness Sound finances facilitate invest- liness, genuine care and attention, and developing. Finnair is a strong ments in up-to-date aircraft and and acting effectively for the best of Finnish brand that increasingly arous- keep them in good condition. the customer. Finnish straight for- es positive thoughts elsewhere in the Personnel look after the customers at wardness and good commonsense world, too. every stage of their journey – also in help in a wide range of situations. exceptional circumstances. 11 On Finnish Wings to the Ends of the Earth

ore and more people in in people more and ore M

Finnair is quickly being con being quickly is Finnair urope – not only the fastest, but fastest, the only not – Europe to >> Finnair is one of the best known known best the of one is Finnair >> market, home company’s the in brands also is airline the of recognition but Blue-and- elsewhere. rapidly growing white in quality for synonym a as firmed markets. new connection best the has who know Asia comfortable. most the also The Finnair brand is strong. One senses it everywhere. - - -

odern, technical innova technical odern, M Operations are examined continu examined are Operations the path travelled by the customer customer the by travelled path the pos as carefree and easy as made is sible. opportunities development new for ally of innovations the that these in is it – found. are tomorrow >> Finnair’s new aircraft provide the the provide aircraft new Finnair’s >> travel air efficient and comfortable most experience. and life, customer’s the facilitate tions New services are developed to make the customer’s journey easier.

fresh and a delight for delight a and fresh

Customer areas and tools are tools and areas Customer Service is refreshingly different - of quality and with perspective. friendly. Finnair’sserviceis friendly. clear. and genuine updated continually to ensure that it is it that ensure to continually updated up-to-date, eye. the are Customers tidy. and neat stylish, and uncomplicated an in approached >> Finnair’sis serviceenvironment>>

13 EUROPE’S FASTEST LINK TO INDIA a i d n I o t k n i L t s e t s a F s ’ e p o r u E

Finnair has the fastest link between the world’s two largest democracies, the EU and India. Thanks to Helsinki’s geographical location, the flight time to Delhi is only 6 hours and 30 minutes. Finnair is the only airline in Northern Europe offering a route to India. The new connection is of particular interest to Indian travellers.

Finnair opened its route to Delhi in October India is actually more a continent than a country; it has 2006. Interest in the route has been great from as many states and official languages as Western Europe. The the very start. Initially, Finnair has been flying whole of India can’t be conquered in an instant, but Finnair to Delhi three times a week, but on account of flies to Delhi and Mumbai, from where good connections strong demand the number of weekly flights radiate to every corner of the country. will rise to seven in spring 2007. At the same India is the world’s second most populous country and time, a new route to Mumbai will be launched a growing economic giant whose gross national product is with five weekly flights. expanding at around eight per cent per year. Indian business The fast Delhi link serves Nordic companies, which already and leisure travel is growing in double-digit figures. Business have many factories, sales companies and joint ventures in relations with Europe are tightening and the country’s 300 India. There is also great demand for the route from further million-strong middle class are constantly looking for new travel Delhi captivates with its smiles. India is a land of afield in Europe, because only a few European capitals have a destinations. opportunity for travellers and business life alike. direct connection to Delhi. For example, there is no connection India’s developing economy is also having a strong impact from the EU capital Brussels. on demand for air freight. Cargo traffic from India to Europe is growing strongly. “When I travel from Stockholm to Delhi, Finnair is absolutely the best option. The connection through Helsinki saves me nearly one and a half hours in travel time compared to other airlines. Changing aircraft at Helsinki-Vantaa Airport is a pleasant experience, because the distances between terminals are short. The lounge services are also excellent.” Tina Engström, Sales Director, Stockholm

STOCKHOLM

HELSINKI

STOCKHOLM - HELSINKI - DELHI Finnair has a fast link 9 h 10 min between Europe and wonderful India.

DELHI We invest in service. There are also Indian cabin staff on our flights.

THE WELCOMING WARMTH OF THAILAND d n a l i a h T f o h t m r Wa g n i m o c l We e h T

Finnair’s Asian traffic began with the Bangkok route 30 years ago. Since then, Thailand has become overwhelmingly the most popular long-haul destination for Nordic holidaymakers. Finnair flies to Bangkok up to twice a day.The Bangkok flights are also increasingly popular among business travellers.

Finnair’s first destination in Asia was Bangkok. both leisure and business. Of the European airlines flying to Initially, the route was operated only in the win- Bangkok, Finnair is the second largest. ter season, once a week with a DC-8 aircraft. Finnair’s Bangkok route differs from its other Asia routes Now Finnair has scheduled flights to Thailand in that demand for the flights comes principally from Finland daily throughout the year. During the high sea- and Scandinavia. Thailand is above all a holiday destination, son, from December to March, Finnair flies to because its climate, developed services and reasonable prices Bangkok up to twice a day. The flights arrive at are attractive to tourists. The growth of the tourist industry in Bangkok’s new, modern Suvarnabhumi Airport, which opened Thailand has also increased business travel from Bangkok to in September 2006. European destinations. The number of passengers between Finland and Thailand As well as city holidays, travellers are also interested in The warm climate and Thai friendliness attract has grown steadily. In the first year, fewer than 3,500 pas- Thailand’s beach resorts, to which there are excellent connec- travellers to the country all year round. sengers travelled on the Bangkok route, while in 2006 nearly tions from Bangkok. Finnair also flies leisure flights direct to 60 times that number, over 200,000 people, were carried for Thailand’s holiday paradises.

“Our family goes every year to Thailand at the darkest time of winter to seek light therapy and relaxation away from the pressures of work. We have always flown with Finnair, because we know that the company will take care of its customers in all circumstances. In our opinion, Finnair is particularly good at looking after child passengers.” Reija and Kari Tanskanen and their children Tino and Essi, Lahti

HELSINKI HELSINKI – BANGKOK 9 h 45 min Bangkok was Finnair’s first long-haul destination; the route opened in 1976.

Finnair flies to Bangkok BANGKOK up to twice a day.

17 Nagoya–a Third Destination in Japan -

“I often fly between Nagoya and St. Petersburg on busi on Petersburg St. and Nagoya between fly often “I that means connection Helsinki-Nagoya new The ness. Finnair before. than less hours four is time flight the also but Petersburg, St. to only not links excellent has lie-flat class business the value I Europe. of rest the to for journey air the use to me allow they because seats, the after work for shape good in am I way this In rest. Nagoya specialist, automation Sato, Akinobu flight.” Finnair is the only airline that flies from Northern Europe to all three of Japan’s most important cities: Osaka and Tokyo, Nagoya.

Japan has many faces. Under the modern surface, centuries-old traditions are cherished. -

NAGOYA 12 h 15 min Japanese travellers chose Finnair as their favourite west North the over first – 1983 since Japan to flown has Finnair Connections to Japan improved further when in December December in further when improved Japan to Connections Finnair will become the third largest western airline operatingwesternairline largest third the become will Finnair Japan. and Europe between the Magazine, AB-ROAD survey by a conducted in airlineern country’s best known travel magazine. Finnair’s meals and as Japanese, the of opinion the in best world’s the drinkswere were the other aspects of its cabin service. The survey found to like also would Japanese which on airline an is Finnairthat again. travel Pole, and now three hours faster along the northern Siberia service cabin Japanese-speaking had have flights The path. flight verythebeginning. staff from Finnair doubled its number of flights to Tokyo from two to four four to two from Tokyo to flights of number its doubled Finnair 2007, spring for planned frequencies additional Withweek. a NAGOYA - HELSINKI - ST PETERSBURG ST PETERSBURG ST uropean capitals. European HELSINKI Nagoya, which has a population of around two million, is situated on the east coast of of terms In Osaka. and Tokyo between Japan affluent most Japan’s of one is it levels income cities. Nagoya is known as the headquarters

Nagoya and over 20 over and Nagoya Nagoya is Finnair’s latest launch in Japan. The service to the main hub of central Japan, Japan, central of hub main the serviceto The Japan. in launch Finnair’slatest is Nagoya flights three of schedule a with 2006 June in began people, million 20 of area economic an between link offersfastestFinnair the connections, transit excellent to Thanks week. a

Finnair is the only airline that flies from Northern from flies Europethat airline only the Finnairis Finnair’s Nagoya flights account for around 20 per cent to all three of Japan’s most important Osakacities – Tokyo, Nagoya. and of flight capacity between Nagoya Europe. and fifths between Four capacity flight of of Japanese. are route the on passengers up around Toyota, both in terms passengers and air cargo. In cargo. air and passengersterms in both Toyota, around up renowned also is Nagoya industry, automotive the to addition ceramics.industrytextileand its for of the car manufacturer Toyota. The FinnairThe route serves themanufacturerof car Toyota. the grown has manufacturersthat electronics and vehicle of cluster NAGOYA – A THIRD DESTINATION IN JAPAN

DAILY TO EXHILARATING SHANGHAI i a h g n a h S g n i t a r a l i h x E o t y l i a D

In the last ten years, on the east coast of China midway between Beijing and Hong Kong, a new Shanghai has risen, with lights and skyscraper silhouettes that leave Manhattan in the shade. Finnair flies every day of the week to China’s biggest city – exhilarating, pulsating Shanghai.

Shanghai is China’s leading centre of business and European companies, and provide direct cargo links to life. It has grown at a stunning rate. China has one of China’s most important economic areas. the world’s fastest growing market, and Shang- Like most Asian connections, the Shanghai flight departs from hai is becoming a financial hub for the whole of Helsinki late in the afternoon. This ensures that flights arriving Asia. Foreign investment is streaming into the from Europe enjoy good onward connections to the Shanghai city at a rate of 10 billion euros a year. The financial and bank- service. Correspondingly, passengers on the return flight can ing world as well as technology companies are among those connect smoothly with Finnair’s European departures. to favour Shanghai. Finnair’s China service began in 1988 with a one flight a Shanghai is also one of China’s most popular tourist cit- week schedule to Beijing. Now, during the high season, the ies, receiving more than seven million visitors every year. The airline operates more than one hundred flights a month, to city provides an excellent window on to the modern Chinese Guangzhou, Beijing and Hong Kong, in addition to Shanghai. The skyscrapers of the Pudong area symbolise Shanghai’s way of life. Excluding Guangzhou, Finnair has connections every day to rapid development as a hub of Asia’s financial life. Finnair was the firstone world airline to begin a service to its Chinese destinations. Shanghai, with a weekly schedule of three flights in 2003. Now daily Shanghai flights serve the travel needs of many Finnish “For Spaniards, Finnair is an excellent option when they are travelling to China, as a flight connection is necessary somewhere in Europe. Helsinki may at first glance seem rather remote, but the direction is right, because all European airlines fly to China over Helsinki. For me, Finnair is the number one choice.” Nuria Lopez Romero, Product Manager, Madrid

BARCELONA HELSINKI

SHANGHAI In China, Finnair flies to Beijing, Guangzhou BARCELONA-HELSINKI –SHANGHAI and Hong Kong, 14 h 55min in addition to Shanghai. In the high season there are one hundred flights a month to China. 20

FINNAIR’S SUCCESS FACTORS

Finnair delivers service Located on a stream of passengers Success in competition between airlines is to a large extent based Finnair’s Asia strategy is based on the Helsinki Gateway concept, on service quality and the added value experienced by the customer. which delivers the fastest connections between Asia and Europe. That’s why service development plays a central role in Finnair. The route network is developing in both Asia and Europe.

The starting point for good service is to offer circumstances, as they travel across the Finnair’s route network is a mesh of hun- misleading, but this can be seen easily on customers the best connections. Finnair’s route network. dreds of pairs of cities, connecting Asia and a globe. Helsinki is the first European route network and flight frequency give Europe. Every new Asian route opens up capital when flying from Asia to Europe. And customers the opportunity to plan jour- Finnair’s in-flight service is highly valued. 40 new connections between Asian and Helsinki opens up the whole of Europe. neys according to their individual needs. Finnair pays attention to its customers’ opi- European destinations. At the same time, Cooperation with the oneworld alliance nions when developing its service. a vast number of direct links are created Compared with the giant airports of Euro- and other airlines extends the customer’s for Finnish customers. pe, making a flight transfer at Helsinki-Van- options further. The Finnair Plus frequent-flyer scheme has taa is easily accomplished, in a little more more than 550,000 active members, who Most people travelling between Europe and than half an hour. A key factor in good service is keeping are taken into account in Finnair’s service Asia need to make at least one flight change, promises. As Europe’s most punctu- chain. Frequent flyers value services that because the majority of travellers have no Finnair’s objective is to fly daily to as many al airline, Finnair carries its customers make travelling easier. Loyalty customers direct connection available to them. destinations as possible. Travel planning on schedule. Finnair’s Network Cont- who travel most can enjoy the company’s becomes easier when there is a flight con- rol Centre looks after customers in va- lounge services. The shortest route from Central Euro- nection every day. Such destinations in 2007 rious situations, including exceptional pe to Asia runs over Helsinki. An atlas is are Bangkok, Delhi, Hong Kong, Osaka, Finnair leads the field in the development Beijing and Shanghai. A new Asian des- of electronic services. The use of the elec- tination, Mumbai in India, will open in tronic flight ticket, or e-ticket, means that it spring 2007. On account of growing Asi- is quick and easy both to purchase a ticket an traffic, Finnair is also opening new ro- and check in for a flight on the internet. utes in Europe.

FINNAIR SERVICE STANDS OUT CONNECTING ASIA AND EUROPE • Top punctuality in Europe • More than 50 international and • Lie-flat seats in business class on 15 domestic route destinations all long-haul flights • At Helsinki, the shortest transfer • Prize-winning wine cellar time between international flights • Service developed according is only 35 minutes to customers’ wishes • One new Asian route creates 40 new • Advanced electronic services connections between Asia and Europe. Finnair’s in-flight service is rated A flight transfer at Helsinki-Vantaa • Daily non-stop connections to one of the best in Europe. Airport is fast and efficient. most Asian destinations 21 s r o t c a F s s e c c u S s ’ r i a n n i F

A modern fleet brings savings Personnel structure changes according to need

Finnair has purposefully modernised its fleet in recent years. The demands of air transport require strong expertise. Finnair develops The company has one of the most modern fleets inE uropean its personnel structure to meet the changing needs of flight operations. traffic. New aircraft are being acquired for long-haul traffic. Development in the technical sphere also shapes job descriptions.

In terms of cost-effectiveness, it is impor- mestic traffic are operated by Airbus A320 Finnair’s objective of focusing on its core Simultaneously, additional staff will be rec- tant for an airline to have aircraft that are and Embraer aircraft, whose seat numbers business areas, scheduled passenger and ruited into flight operations for the needs of suitable for each type of route. The objec- vary from 76 to 181. This brings flexibility leisure traffic, is shaping the company’s or- expanding Asian traffic. Flexibilities, which tive is to have a spectrum of aircraft ty- to the management of capacity. ganisation and personnel structure. In terms will enable more efficient crew utilisation pes that is as narrow as possible, because of functions that support flight operations, as long-haul traffic increases, have been training crew and keeping up maintenan- Passenger load factors will remain high, the aim is to create new ownership and part- agreed in the employment conditions of ce preparedness for many types of aircraft because the flexible fleet will provide a sui- nership arrangements to produce services flight staff. generates extra costs. table size of aircraft for each route and cost-effectively and competitively. flight. Crew utilisation will be efficient, as Target setting and performance measu- The goal of Finnair’s fleet modernisation the same crew can fly both the long-haul Through arrangements carried out in 2006, rement within the Group’s different units is to have the aircraft of only two manu- and the shorter-haul Airbuses. 670 jobs are being cut from Finnair Techni- and workplaces will be effected using the facturers in scheduled passenger traffic. cal Services and the Group’s administrative Balanced Scorecard, supported by one of After the fleet modernisation, long-haul Finnair owns more than half of its fleet. support functions. The personnel reductions, the incentive schemes. traffic will be served by 250-350-seat Airbus Versatile financing options improve the mainly based on retirement solutions, will A340 and A350 aircraft. European and do- company’s risk management. be implemented by the end of 2007. The other incentive scheme covering all personnel produces a profit bonus for the A modern fleet is economic on fuel and Personnel Fund if the company’s financial loads the environment less. The new air- performance fulfils certain conditions de- craft and their modern technology reduce fined in advance. Key individuals are also maintenance costs. covered by a share bonus scheme.

FLEET RENEWAL UNDERWAY FINNAIR EMPLOYS • Finnair Group has 72 aircraft • 9,700 employees • Orders for nine Airbus A350 and three • Traffic growth is creating Airbus A340 aircraft, four options more jobs for both • Finnair is one of Finland’s most • Embraer fleet will grow to 20 attractive employers in the coming years • Focusing on core business • ATR 72 turbo-proportion aircraft is changing structures Finnair has ordered Airbus A340 and to be discontinued Cabin service staff are an important A350 aircraft for Asian traffic. • Age of European fleet less part of the Finnair brand. than four years Finnair and Society

Responsibility begins from Investments in the sound finances environment

Bearing social responsibility requires a company The biggest environmental step that an airline to deliver long-term profitability and competitive- can take is to invest in a modern fleet. Finnair ness. Finnair is part of Finnish society, but to has systematically modernised its fleet by an increasing extent it also has a role as a builder investing in efficient, environmentally of connections between Europe and Asia. positive aircraft.

Corporate social responsibility is a fundamental attitude and The consumer can make environmentally friendly choices by way of operating. Taking sustainable development into account favouring airlines that have modern fleets and the most direct in air transport and more widely in the travel business is a guid- flight connections. Finnair has direct connections to nearly 70 ing principle in Finnair’s decision-making. scheduled destinations in Finland and abroad. Air transport is a very competitive sector that has a predis- Finnair’s European traffic fleet consists of modern Airbus position to continuous and rapid change. By pursuing respon- and Embraer aircraft, whose average age is less than four years. sible profitability and a sustainable growth strategy, Finnair has The flexible use of these aircraft on different routes improves created the financial health that enables future investments to load factors. They are also significantly more environmentally be made. A large-scale environmentally positive fleet moderni- friendly and economic than their predecessors, because their sation programme began in 1999 and will continue into the nitrogen oxide and carbon dioxide emissions are lower and next decade. their engines quieter. Efficient transport links and services are a prerequisite of Owing to the new aircraft, the Finnair fleet’s key figures modern western society. Finnair and its extensive route network describing environmental efficiency, such as fuel consumption are an important part of the structure and competitiveness of and carbon dioxide emissions per passenger kilometre, have Finnish society. improved. Air transport in Finland is the only form of public transport A modernisation of the long-haul fleet is also proceed- that does not need taxpayers’ support. Finnair, indeed, finances ing. The delivery of the first Airbus A340 in June 2006 was a significant part of Finland’s air transport infrastructure and the beginning of the renewal of Finnair’s long-haul fleet. The generates for society tax revenues as well as paying dividend. present Boeing MD-11s will be replaced with Airbus aircraft Finnair directly employs more than 9,000 people, and indi- which have lower emissions rates. rectly thousands more, in different parts of Finland and the world. The EU’s proposed emissions trading policy is, in principal, Rapidly growing Asian traffic has provided work for thousands on the right lines in taking into account the benefit produced >>On the way to a better tomorrow. Finnair of Finnair employees. for the fuel consumed. The scheme should, however, be world- participates in the Change for Good campaign, wide, so that it does not distort competition between different which collects donations for work against AIDS countries’ airlines. to help Vietnamese children. 23 FUEL BURN (KG) PER

PASSENGER PER 100 KM y t e i c o S d n a r i a n n i F

5.0

4.0

3.0 Sustainable tourism For a better tomorrow 2.0 1.0

Aurinkomatkat-Suntours is a good choice when cus- Finnair wishes to bear its responsibility and to 0.0 tomers wish to travel in accordance with the princi- act as a good example. Cooperating on envi- Embraer MD-83 170 ples of sustainable tourism. Operations are guided by ronmental issues and supporting the everyday Embraer 170 Helsinki-Manchester the ethical aide-mémoire: “We don’t inherit the world lives of children near and far will bring a better MD-83 Helsinki-Manchester Burn calculated for 76 passengers from our parents; we borrow it from our children.” tomorrow closer. in both aircraft types.

Tourism generates revenue for travel destinations and employs Finnair also wants to make a concrete impact where the pre- NITROGEN OXIDE AND CARBON DIOXIDE EMISSIONS No CO2 huge numbers of people. The future of the entire tourism indus- requisites for a decent life are not automatically within hand’s X try worldwide is dependent on the state of the environment, reach. 7.0 1,600 culture and society at holiday destinations. Finnish travellers Finnair has engaged in charity work with UNICEF for 12 years 6.0 1,400 are continually seeking out new holiday destinations, and more now. Finnair’s and UNICEF’s traditional Christmas Change for 5.0 1,200 and more Finns are aware of, and wish to act according to, Good campaign has collected money for children in Rwanda, 4.0 1,000 the principles of sustainable tourism. Kaliningrad, Kosovo, Ethiopia and Nepal. Starting from 2006 3.0 800 600 Since 1999 Aurinkomatkat-Suntours has been operating the campaign proceeds are donated to work against AIDS for 2.0 400 a sustainable tourism programme. For tour operators this the good of Vietnamese children. Finnair wants to be involved in 1.0 200 is a sensible investment, because no-one wants to travel to helping where the company itself operates, namely in Asia. 0.0 0 a spoiled environment or witness a myriad of social prob- The Baltic Sea region is Finnair’s home. It is also a signifi- 04 05 06 lems. Aurinkomatkat-Suntours’ staff are trained to take the cant market area, because we want to attract travellers from Carbone dioxide g/RTK Nitrogen Oxiden g/RTK

Nitrogen oxide (NOx) and carbon dioxide (CO2) emissi- challenges of sustainable tourism into account. Contractual Asia to an unspoilt natural environment. That’s why Finnair ons in air traffic in relation to tonne kilometres (RTK). partners in destination countries are also offered training and participates in supporting work done to help the Baltic Sea information. in a waterways protection project of the Finnish Association NOISE LEVELS Aurinkomatkat-Suntours is actively involved in establishing for Nature Conservation. The primary aim of the project is to EPNdb A340 A321 A319 A320 MD-11 B757-200 the Tour Operator Initiative for Sustainable Tourism Develop- reduce the eutrophication of Baltic Sea and the waterways 170 Embraer 0 ment (TOI), a joint project of tour operators, UNESCO, the that flow into it. A further objective is to inspire people to -2 UN’s Environment Project UNEP and the WTO (World Tourism engage in waterways protection work and to produce teach- -4 -6 Organisation). ing material for schoolchildren. Finnair understands that only -8 Aurinkomatkat-Suntours is committed to fighting against the through cooperation can environmental issues be steered in -10 -12 sexual abuse of children. The company has a clause in all of its a better direction. -14 -16 hotel agreements stating that an agreement can be terminated Finnair is also involved in the work of the Association of -18 if the hotel permits child sex trade in its area. Friends of the University Children’s Hospitals in Finland. Through -20 -22 Aurinkomatkat-Suntours also employs a 35-point sustainable the association, Finnair helps the everyday lives of children and -24 tourism check-list when making agreements with hotels. their relatives by supporting their travel within Finland. Margin of Finnair aircraft types measured at three different points to ICAO Chapter 3 noise certification limits. Noise levels of all Finnair aircraft types are lower than ICAO limits. 24 DISTRIBUTION OF SCHEDULED TRAFFIC

raffic i f f a Tr r e g n e s s a P d e l u d e h c S AND CARGO REVENUES A BRIDGE BUILDER BETWEEN EUROPE AND ASIA

Finland 15% With many European airlines looking for new business amid intense competition, Finnair’s success factor has been passenger Europe 48% and cargo traffic betweenE urope and Asia. Every third euro comes directly from Asian traffic. Nearly half of Finnair’s revenue Asia 33% from scheduled passenger traffic is derived from its Asia-Europe routes, if one includes the European transit connections of America 4% Asian flights. The Asian travel market is growing now at a stunning rate and it will continue to do so in the years to come.

The Asia strategy of Finnair Scheduled Passenger Traffic is based on Airbuses, are economic on routes where demand does not require DISTRIBUTION OF PASSENGER SALES Helsinki’s excellent location, precisely on the shortest flight route a large aircraft. IN SCHEDULED TRAFFIC between Central Europe and Asia. In addition to fast connections, The modernisation of the long-haul fleet began in summer 2006 Finland 49% the popularity of Finnair’s flights is also based on the company’s when the first Airbus A340 wide-bodied aircraft was taken into serv- Europe 32% top quality business class with its lie-flat seats and superb food and ice. By the middle of the next decade, new Airbus A350 aircraft will drinks service. form the backbone of the long-haul fleet. A fleet consisting of Airbus Asia 15% The passengers on Finnair’s Asia flights are mostly Asian, but many and Embraer aircraft is flexible and efficient in terms of the use of America 4% customers also come from various countries in Europe, particularly both aircraft and crew. from Scandinavia. The number of Swedish passengers on Finnair’s Asian flights grew last year by over 70 per cent. Finnish customers account for Efficiently in short range traffic Distribution of cargo sales less than a fifth of passengers. Air freight also constitutes a significant proportion of revenue from Asian and North American traffic. Finnair’s domestic traffic comprehensively serves the needs of busi- Finland 23% ness and leisure traffic. The busiest routes are flown with Airbus and Embraer jets. Turbo-prop traffic on southern Finland and Europe 19% A flexible fleet increases profitability Baltic country routes is handled by Finnair’s Estonian subsidiary Asia 52% European traffic is based on the Airbus A320 fleet, which Finnair has Aero. Finnair operates in the Swedish market with the FlyNordic America 6% modernised in recent years. The start-up of profitable traffic to smaller airline, whose home base is Stockholm. FlyNordic provides inex- destinations is possible with the aid of Embraer aircraft, which repre- pensive flight services on Sweden’s most important domestic and sent the latest technology. The Embraers, which are smaller than the Scandinavian routes as well as in leisure traffic. CARGO

International 1,000 kg Domestic The best connections to everywhere in Europe 100,000 SCHEDULED PASSENGER 90,000 When flying via Helsinki from Europe to Asian, you are travelling in the right direction TRAFFIC STATISTICS 2006 all the time. Finnair has Europe’s largest natural market area. When customers are com- 80,000 • Scheduled Passenger Traffic turnover ing from Asia, Helsinki is an excellent place to change aircraft, because Finnair’s range (million euros): 1,522 70,000 of routes opens up the whole of Europe to Asian passengers. Finnair’s timetables have • Number of employees: 4,114 60,000 been built to ensure fast connections between Asian and European flights. • Passengers on scheduled flights: 7.5 million 50,000 Finnair’s Asian network, combined with its wide spectrum of European onward • Total number of flights: 98,468 40,000 connections, provides the best links from European cities that have no direct flight connection to Asia. The growing Asian traffic, therefore, also increases travel on Fin- • Growth of Asian traffic: 27.3% 30,000 nair’s European flights. • Cargo carried: 93.8 million kilos 20,000 10,000 0 02 03 04 05 06 25

FULFILLING FINNISH DREAMS c i f f a Tr e r u s i e L Aurinkomatkat-Suntours is a pioneer of Finnish leisure travel and is the number one brand in its field in Finland. In cooperation with Finnair Leisure Flights, Aurinkomatkat-Suntours takes more than 350,000 Finns every year to fulfil their holiday dreams in different parts of the world. Alongside the traditionalE uropean beach resorts, long-haul destinations as well as theme and activity trips are also increasingly popular.

Leisure Traffic is the second of Finnair Group’s core businesses. Competitiveness decisive in leisure flight business Aurinkomatkat-Suntours is Finland’s leading package tour operator, with a market share of 37 per cent. Finnair Leisure Flights is the most Finnair has been carrying tourists to holiday destinations for decades. significant provider of flight services to package tour operators, with Finnish customers trust in Finnair’s services. Finnair Leisure Flights a market share of around 70 per cent. Leisure Flights’ services are used flies in the summer to Mediterranean beach resorts, and in the winter by ten different tour operators. Around one million package tours are to holiday destinations in, among other places, Asia, Brazil and the made from Finland each year. Caribbean. The seven-aircraft Boeing 757 fleet is ideal for all holiday traffic needs and the daily utilisation rate of the aircraft is the best in the world. All In 2006 Aurinkomatkat-Suntours had Demand for long-haul destinations growing of Leisure Traffic’s aircraft are being fitted with winglets, which reduce nearly 350,000 customers. Leisure Traffic’s main market area is Finland, but an increasing number air resistance. The change means that fuel consumption is cut by five of customers come from neighbouring countries. To expand its opera- per cent and the flying range of the aircraft extended by 370 kilometres. tions into Baltic states, Aurinkomatkat-Suntours acquired Estonia’s Leisure Traffic’s own fleet is supplemented by capacity leased from Distribution of Aurinkomatkat-Suntours production second largest tour operator, Horizon Travel, at the end of 2006. Scheduled Passenger Traffic, which boosts aircraft utilisation. Winter SEASON 2006/2007 Demand for Asian destinations, particularly Thailand, is growing Leisure Flights’ customer service is enhanced by chargeable extra steadily. After the Canary Islands, Thailand is becoming the Finns’ second services. A business class meal option and a more spacious seating Spain 48% most popular holiday destination. Finnair Leisure Flights flies to a total place, for example, can be ordered on the internet. Onboard, children Long-haul destination 30% of 66 holiday destinations, in more than 30 countries. There is growing are served their own children’s meals first. The travel experience of SunSki 5% demand for various independent travel options and active holidays. youngsters is also improved with entertainment electronics. Middle East 3% Portugal 3% Other 11% Distribution of Aurinkomatkat-Suntours A leisure flight to China production summer SEASON 2007 For leisure travellers who have become familiar with European destinations Leisure Traffic statistics 2006 over the years, Asian holiday oases have new sights and experiences to offer. Greece 39% Aurinkomatkat-Suntours capacity towards Asia is growing and the spectrum of Italy 11% • Aurinkomatkat-Suntours’ turnover choice is widening. Thailand is not new as a holiday country, but its popularity Spain 10% (million euros): 261 Turkey 8% just grows and grows. Bulgaria 7% • Trips sold by Aurinkomatkat-Suntours: 344,227 Alongside Thailand, China’s new leisure destinations have joined the Asian Long-haul destination 5% • Leisure Flights’ turnover (million euros): 238 holiday resorts. Aurinkomatkat-Suntours offers a combined city and beach Other 20% vacation in China. At the end of Finnair’s direct flight, the city of Guangzhou with • Leisure Flights’ passenger numbers: 1,241,500 its inexpensive marketplaces exudes authentic Chinese atmosphere. After a few days in the city, relaxing in the beach resort of Hainan is just the ticket. 26

ravel Services e c i v r e S l e v a Tr A TRAVEL DEPARTMENT STORE AMID FIERCE COMPETITION

The travel agency sector has been in a state of change since the turn of the millennium. A transformation in customer and consumer behaviour as well as airlines’ and tour operators’ abandonment of sales commission payments has changed the travel agencies’ earnings model. Instead of sales commissions, revenue is generated from service fees charged from customers. The Finnair Group travel agencies and Amadeus Finland, which sells travel agency systems and integration services, have been pioneers in the development of new business models.

The widespread use of the electronic ticket and the rapid development Finnair’s travel agencies specialises of internet services have had a significant impact on consumers’ purchasing behaviour in a short space of time. Individual journeys The division of work between Finland Travel Bureau Ltd (FTB) and Area are increasingly obtained via the internet, either direct from airlines Travel Agency Ltd, the travel agencies belonging to the Finnair Group, or by using travel agencies’ electronic services. was adjusted during 2006. Area sold its leisure travel offices to FTB. Overlaps in the travel agency network resulted in about 70 job cuts. Area now focuses on business travel and on developing travel man- Travel agency services focused more on New opportunities the management of corporate travel. agement services for corporate customers. As far as leisure trips are Last autumn, Finnair’s travel agencies opened a leisure travel electronic concerned, Area will concentrate in the future on electronic channels service that helps customers build, book and pay for trips themselves and telephone service. FTB, on the other hand, alongside its business on the travel agencies’ websites. Flights and hotel accommodation can travel service, is being developed into a comprehensive travel department be combined in the package and the service will be gradually expanded store, utilising an extensive office network, electronic business and a to car hire and other services. telephone service. FTB’s city-break package tour business transferred The development of information technology has also enabled the to Aurinkomatkat-Suntours last year. introduction of new, user-friendly corporate applications. Amadeus The travel agencies are two of the three largest travel agency groups in Finland and travel agencies have brought to the market diverse appli- Finland. FTB’s Estonian subsidiary, Estravel, is the leading travel agency cations for companies’ travel management needs. in its market area. Estravel operates in each of the three Baltic states.

Improved efficiency in e-business payments

In recent years, Finnair Group’s Amadeus Finland Oy has developed solutions Travel Services that travel agencies and companies providing travel services can utilise in their statistics 2006 • Area Group, turnover (million euros): 18.7 e-business activities and operational management. The focus of development work has shifted to the processes that lie behind • Area Group, flight tickets sold: 320,272 e-business operations. One of the major projects in 2006 was an e-business pay- • FTB Group, turnover (million euros): 60.1 ments system, Amadeus e-Payment, which connects journey bookings with real- • FTB Group, flight tickets sold: 460,491 E-business creates new opportunities time payment and ticket delivery. • Amadeus Finland, turnover (million euros): 11 for travel agencies. The new system is particularly evident as a reduction of work behind the scenes in e-business and as increased speed and reliability in the flow of information. To customers the innovation gives more payment options as well as allowing last- minute travel purchases. 27

A TRAVEL DEPARTMENT STORE AMID FIERCE COMPETITION SUPPORT SERVICES GO INDEPENDENT s e c i v r e S n o i t a i v A

Aviation Services – ground handling, catering operations and technical services – are an important part of air transport logistics. Structural change in the industry is also influencing the development of support services. In recent years Finnair has guided its support services in the direction of greater independence. This will allow them to be developed better on the basis of their own business models and according to the conditions of each particular sector.

The biggest customers of the units belonging to the Aviation Services use of a traditional labour force and declining price levels, operations business area are the Finnair Group airlines, but the proportion of have not achieved profitability, however. turnover accounted for by customers from outside the Group is growing. Ground handling operations at domestic airports are already com- Business units that support flight operations have assumed an active pletely handled by companies outside the Group. In Sweden and Norway, role in creating new forms of service and customer relationships. Northport itself has founded subsidiaries that provide airport ground The demerger and outsourcing of support services have become handling services on a new business model in Stockholm and Oslo. commonplace in the airline industry. In Finnair, too, some support functions – the latest being real-estate and facilities services – have been Quality catering services are part Catering operations profitable transferred for partners to handle, and new cooperation models are being of Finnair’s service chain. investigated all the time. Finnair Technical Services is currently going Finnair Catering produces meal services for airlines and is also respon- through a major change process in order to improve profitability. sible for sales that take place in airports and on aircraft, namely travel retail operations. A subsidiary, Finncatering Oy, prepares meals for economy class and leisure traffic flights. Partnership arrangements in ground handling aviation services Finnair Catering’s operations are profitable. The success factor of personnel As far as ground handling subsidiary Northport Oy is concerned, various catering production is logistics, as a result of which attention has been Technical services 51% ownership and partnership options for the company or parts thereof focused on material streams, product manufacturing processes and Catering 24% are being explored. Northport’s operating model has undergone major transportation, in order to improve cost-effectiveness. development in recent years. Owing to the cyclical nature of traffic, the Ground handling 23% Facility services 2%

Profitability improving at Finnair Technical Services aviation services turnover At the beginning of 2006 a competitiveness project was initiated in Finnair Tech- AVIATION SERVICES STATISTICS 2006 nical Services with the aim of improving the unit’s profitability by merging and Technical services 43% • Finnair Technical Services’ turnover developing operations. Productivity has been boosted with the aid of a new com- Catering 28% (million euros): 198 prehensive ERP system. In connection with the maintenance of the new Embraer • Northport’s turnover (million euros): 73 aircraft, Finnair Technical Services has applied a new model based on the LEAN Ground handling 16% concept, by which the whole of line maintenance will be developed. • Finnair Catering’s turnover (million euros): 130 Facility services 13% The technical development of the fleet has lengthened maintenance intervals, • Finnair Technical Services’ employees: 1,944 which reduces the amount of labour required for maintenance activities. Mainte- • Northport’s employees: 863 nance preparedness for types of aircraft withdrawn from the Finnair fleet will be • Finnair Catering’s employees: 899 cut and expertise focused on fewer types of aircraft. The change process at Finnair Technical Services requires an open-minded ap- proach in which all functions are evaluated on both an operational and financial basis. Operations for which there is no commercial justification will be discontinued. BOARD OF DIRECTORS 2006

2. 1.

4. 3.

6. 5.

8. 7. 29 6 0 0 2 s r o t i d u A d n a s r o t c e r i D f o d r a o B 1. Christoffer Taxell, b. 1948, LLM, Ministeri (Finnish honorary 5. Kari Jordan, b. 1956, BSc(Econ), President and CEO of Metsäliit- AuDITORS title), Chancellor of Åbo Akademi University; Chairman of the to Group; Member of the Board of Neste Oil Plc and Julius Tallberg Board of the organisation Föreningen Konstsamfundet and Åbo -Kiinteistöt Oyj; Member of Board of the Confederation of Finnish Regular auditors Akademi University Foundation; Member of the Board of Sampo Industries; Member of the Working Committee and Vice Chairman Authorised Public Accountants Pri- Plc, Stockmann Plc, Nordkalk Corporation, Luvata International of the Board of the Finnish Forest Industries Association; Member cewaterhouseCoopers Oy, Principal Oy, the Finnish Business and Policy Forum (EVA) and the Research of the Supervisory Board of the Finnish Business and Policy Forum Auditor APA Eero Suomela, and APA Institute of Finnish Economy (ETLA); Member of the Investment (EVA) and the Research Institute of Finnish Economy (ETLA). Vice Jyri Heikkinen Committee of the Society of Swedish Literature in Finland. Chair- Chairman of the Board of Finnair Plc since 2003. man of the Board of Finnair Plc since 2003. Deputy Auditors FAVOURITE TRAVEL DESTINATION: APA Matti Nykänen and APA Tuo- FAVOURITE TRAVEL DESTINATION: London mas Honkamäki, Pricewaterhouse- Venice Coopers Oy

2. Kalevi Alestalo, b. 1947, MSc(Pol), Finance Counsellor, Direc- 6. Ursula Ranin, b. 1953, MSc(Econ), LLM, in the service of Nokia tor of the Corporate and Ownership Policy Unit of the Ministry of Corporation 1984-2005, General Counsel 1994–2005, Secretary Transport and Communications since 2000. Member of the Board of the Group Executive Board 1992–2005, Secretary of the Board of Finland Post Corporation and Vice Chairman of Raskone Oy. of Directors 1996–2005; Chair of the Committee for Competition, Member of the Board of Finnair Plc since 2006. Consumer and Corporate Legal Affairs of the Confederation of Fin- nish Industries 2005; Member of the Board of UPM-Kymmene since FAVOURITE TRAVEL DESTINATION: 2006. Member of the Board of Finnair Plc since 2006. Thailand FAVOURITE TRAVEL DESTINATION: Scotland

3. Satu Huber, b. 1958, MSc(Econ), Managing Director of the Fede- 7. Veli Sundbäck, b. 1946, LLM, Member of Group Executive Board ration of Finnish Financial Services; Member of the Board of Metso and Executive Vice President, Corporate Relations and Responsibili- Plc and Ekonomiska Samfundet i Finland rf; Deputy Member of the ty, Nokia Corporation. Secretary of State at the Ministry for Foreign Board of Svenska Handelshögskolan i Helsingfors; Member of the Affairs 1993-1995; Member of the Executive Committee of the Board Board of the Finnish Cultural Foundation’s Support Association. of the Confederation of Finnish Industries, Vice Chairman of the Member of the Board of Finnair Plc since 2006. Board of the Technology Industries of Finland; Vice Chairman of the Board of the International Chamber of Commerce (ICC), Fin- FAVOURITE TRAVEL DESTINATION: nish Section; Chairman of the Board of the Finland-China Trade Paris Association; Member of the Board of the Finnish National Theatre; Chairman of Board of Huhtamäki Plc 1999–2005. Member of the Board of Finnair Plc since 2004. FAVOURITE TRAVEL DESTINATION: Shanghai

4. Markku Hyvärinen, b. 1948, Deputy CEO of Varma Mutual 8. Helena Terho, b. 1948, MSc(Eng), eMBA, Vice President, Competen- Pension Insurance Company; Vice Chairman of the Board of Mu- ce Development, Kone Corporation. Member of the Board of Kemira tual Insurance Company Kaleva; Member of the Board of If Ska- GrowHow since 2005; Member of the Board of Miinan-Hoitolat Oy deförsäkring Holding AB; Member of Finnair Supervisory Board since 2006. Member of the Board of Finnair Plc since 1997. 1992–1997 and Chairman 1997–2003. Member of the Board of Finnair Plc since 2003. FAVOURITE TRAVEL DESTINATION: Sydney FAVOURITE TRAVEL DESTINATION: Finnish Archipelago

Information on share ownership can be found in the fi nancial report and at the address www.fi nnair.fi /group GROUP MANAGEMENT

Jukka Henrik Hannes Christer

Lasse Kristina Anssi Antero Mika

Kimmo Tero Kaisa 31 t n e m e g a n a M p u o r G

Jukka Hienonen, b. 1961, MSc(Econ), Kristina Inkiläinen, b. 1964, BA, MBA, Tero Vauraste, b. 1967, Lieutenant-Commander Finnair Plc’s President and CEO. In Finnair’s SVP Catering. Managing Director of Fin- (ret.), MSc, SVP Ground Handling, Mana- service since 2005. nair Catering Oy. In Finnair’s service since ging Director of Northport Oy. In Finnair’s 2007. service since 2001. FAVOURITE TRAVEL DESTINATION: Munich FAVOURITE TRAVEL DESTINATION: FAVOURITE TRAVEL DESTINATION: Algarve, Portugal Kuusamo

Henrik Arle, b. 1948, LLM, Deputy CEO, Anssi Komulainen, b. 1964, BA, SVP Kaisa Vikkula, b. 1960, DSc(Econ), SVP EVP Scheduled Passenger Traffi c, member Human Resources, member of the Bo- Leisure Traffi c and Travel Services, member of the Board of Management. In Finnair’s ard of Management. In Finnair’s service of the Board of Management. In Finnair’s service since 1979. 1989–1999 and since 2001. service since 2006.

FAVOURITE TRAVEL DESTINATION: FAVOURITE TRAVEL DESTINATION: FAVOURITE TRAVEL DESTINATION: Irish countryside Maui Greek Islands

Hannes Bjurström, b. 1950, Colonel Antero Lahtinen, b. 1949, SVP Cargo, Mana- (retired), SVP Flight Operations, in Finnair’s ging Director of Finnair Cargo Oy. In Finnair’s service since 1999. service since 1973.

FAVOURITE TRAVEL DESTINATION: FAVOURITE TRAVEL DESTINATION: Australia New York

Christer Haglund, b. 1959, BA, SVP Mika Perho, b. 1959, BBA, SVP Commercial Communications. In Finnair’s service Division, member of the Board of Manage- since 2000. ment. In Finnair’s service since 1985.

FAVOURITE TRAVEL DESTINATION: FAVOURITE TRAVEL DESTINATION: Japan Singapore

Lasse Heinonen, b. 1968, MSc(Econ), SVP Kimmo Soini, b. 1958, MSc(Eng), SVP Technical and CFO, member of the Board of Mana- Services, member of the Board of Manage- gement. In Finnair’s service since 2004. ment. In Finnair’s service since 1985.

FAVOURITE TRAVEL DESTINATION: FAVOURITE TRAVEL DESTINATION: : Italy Thailand

Information on share ownership can be found in the fi nancial report and at the address www.fi nnair.fi /group