Finnair Capital Markets Day 2014

Welcome to Finnair Capital Markets Day

22 May 2014, Helsinki

1 © Finnair | Capital Markets Day, 22 May 2014 Today’s Agenda

Topic 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

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

Break 14:30

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

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

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

2 © Finnair | Capital Markets Day, 22 May 2014 The Finnair opportunity Our strategic targets and roadmap to reaching them

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

3 © Finnair | Capital Markets Day, 22 May 2014 Finnair is a network airline connecting Asia and Europe

North- Leisure Atlantic 11 % More than Over 5 % 9 million 60 European Fleet of 77 Finland passengers and aircraft, of 4 % and MEUR which 44 Asia 15 long-haul 49 % operated by 2,400 in destinations Europe revenue in Finnair. 31 % 2013 (Summer 2014) 2013 ASK split

4 © Finnair | Capital Markets Day, 22 May 2014 Major achievements since CMD 2012

Cost structure

Commercial

Operations

Network

Financing

5 © Finnair | Capital Markets Day, 22 May 2014 We have built one of the best operational airlines in the world...

By focusing on: 2013 performance

European Finnair benchmark* • Structure, size, governance Punctuality 84.2% 89.4%

• Commitment to quality and safety Regularity 98.9% 99.8%

• Operational processes Bags (/1000 pax) 9.6 8.1

• Hub management Connection reliability 98% 98.8% Safety 1st-3rd** • Vendor management

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

6 © Finnair | Capital Markets Day, 22 May 2014 ...and improved cost efficiency & asset utilization

Improved CASK Higher utilization

0,08 16 0,071 0,070 0,071 0,069 +0.6% 0,07 +3.6% 14 +1.3% +14.9% +1.6% +6.0% 0,06 12 0,05 -4.6% 10 -4.1% -3.3% 0,04 +8.4% 8 +7.8% +7.6% €cents 0,03 6 0,02 4

0,01 Block hours/day 2 0 0 2010 2011 2012 2013 2010 2011 2012 2013 CASK ex-fuel Fuel Narrowbody Widebody

7 © Finnair | Capital Markets Day, 22 May 2014 Finnair share and bond price development

Finnair share price development Finnair Bond price development 1 Jan 2012-16 May 2014 since 27 Aug 2013 Finnair

3,50 market 1 800 000cap 105,5 Finnair MEUR 378 3,30 market cap (16 1May 600 2014) 000 105,0 3,10 MEUR 295 1 400 000 (31 Dec 2011) 104,5 2,90 1 200 000 104,0 2,70 1 000 000 2,50 103,5 800 000 2,30 103,0 Finnair 600 000 2,10 market cap 102,5 400 000 1,90 MEUR 283 (3 Dec 2012) 102,0 1,70 200 000

1,50 0 101,5

Volume, shares Close, EUR

8 © Finnair | Capital Markets Day, 22 May 2014 Delivering on strategy for profitable growth

Doubling Asian revenues by 2020 from 2010 level

Growing traffic via Helsinki by optimising its strategic location

Creating shareholder value - delivering 6% operational EBIT

9 © Finnair | Capital Markets Day, 22 May 2014 Doubling Asian revenues by 2020

10 © Finnair | Capital Markets Day, 22 May 2014 Doubling Asian revenue – Where are we now?

Asian traffic revenue, MEUR 42% of 2013 passenger revenue from Asian traffic CAGR 2014–2020 6.96% 3% 9%

9% 42%

37%

Asia Europe Domestic Leisure North Atlantic

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

11 © Finnair | Capital Markets Day, 22 May 2014 Europe-Asia travel expected to increase more than 100% by 2020

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

2010 PAX flows: 130 million Europe – Middle East /Asia (pax/yr) 2020E CAGR (2020E) 60 million +6.3%

PAX throughput at major (2010) international airports (pax/yr) M=million M-East 180M

China's Notes: top 3 1. Pax throughput includes both domestic, international and terminal passengers. Figures hubs include both inbound and outbound pax calculated on basis of country-region pairs. BKK 2. Data available for Mainland China airports does not disaggregate domestic and 300M international passengers. 90M 3. PAX throughput Middle East includes Dubai airport (112m); Doha (38m); Abu Dhabi KUL (26m). China includes Beijing (155m); Guangzhou (88m); Shanghai Pudong (83m) HKG Source: 80M IATA, ATI database, BCG analysis; IATA Country Forecasts; BCG Analysis; World Bank. SIN 120M 90M 12 © Finnair | Capital Markets Day, 22 May 2014 China’s second tier cities offer great potential

2010 GDP for urban clusters Urban clusters in China and their hub USD Billions cities Shanghai 527

Changchun- Switzerland 527 Harbin Jingjinji Liao central- Huhehaote Jingjinji 475 south Taiyuan Shandong Central Belgium 469 Guanzhong BylandHefei Yangzi mid-lower Nanjing Chengdu Shanghai Shandong 418 Chongqing Hangzhou Nanchang Changzhutan Coast West Austria 378 Kunming Shenzhen Guangzhou (includes Foshan) Guangzhou 357 Nanning

0 200 400 600

Source: Dominic Barton, 2013.

13 © Finnair | Capital Markets Day, 22 May 2014 Joint Business Agreement in Europe-Japan traffic strengthens our position in Japan

35% JAPAN 30%

25%

20%

15%

10%

Market share in EUR-JP vv Traffic* 0% • After joining the SJB we are now a part of the largest joint business in Europe–Japan vv. traffic

* Source: SRS Q2 2014.

14 © Finnair | Capital Markets Day, 22 May 2014 Our strengths in Asia – Europe transfer traffic

Shortest and fastest Asia-Europe route Early mover in Europe-Asia direct flights One of world's most punctual airlines

Helsinki airport hub

Strong Nordic brand appeal

On-going long-haul product development

15 © Finnair | Capital Markets Day, 22 May 2014 Growing traffic via Helsinki

16 © Finnair | Capital Markets Day, 22 May 2014 Highly efficient Helsinki hub supports Asia- Europe traffic growth

Room for growth in Helsinki-Vantaa...... with 24h rotation benefits to Asia • 3 runways • Sustainable competitive advantage and cost • 35 min minimum connection time benefits: • Uncongested airspace – 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

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

18 © Finnair | Capital Markets Day, 22 May 2014 Creating shareholder value

19 © Finnair | Capital Markets Day, 22 May 2014 Our key mid-term priorities

The Tools

Fleet strategy Financing Strategic partnerships

The Building Blocks

New Digital Finnair Network Strategy Cargo

The Foundation Competitive Cost Leading Commercial Safe, Efficient Structure Strategy Operations

20 © Finnair | Capital Markets Day, 22 May 2014 We are well on track in achieving cost savings – flight crew labour costs still under negotiation

Savings reached by 22 May 2014: MEUR 167 Total target Phase I: MEUR 140 MEUR 200

Other 136 4 23 Phase II: MEUR 60

Pilots 17

Cabin 18

Technical & ground services 4 8

Other employee groups 17

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

21 © Finnair | Capital Markets Day, 22 May 2014 We are building the foundation for growth

• Competitive cost structure will be key Growth for profitable growth, therefore cost 2016  savings remain in our focus. 2015 • As a vital part of our topline growth, we continue to implement our new Revenue enhancement A350s Commercial strategy and closing the identified revenue gap.

2014 • First A350s enter our fleet next year, and we are ready to grow our traffic Cost savings building on our existing strengths.

22 © Finnair | Capital Markets Day, 22 May 2014 Thank you! Questions?

23 © Finnair | Capital Markets Day, 22 May 2014 Finnair Network Development The Role of Schedule, Partnerships and Route Development In Building the Silk Road

Greg Kaldahl, SVP Resource Management Finnair Capital Markets Day, 22 May 2014

24 © Finnair | Capital Markets Day, 22 May 2014 Silk Road Revisited

In CMD 2012 we shared... What Have We Done Since Then • Industry complexity and changing • Opened two new seasonal routes to demographics Xi’an and Hanoi • The strength of Helsinki’s geographic • Entered joint business arrangements position for Atlantic and Japan flying • Finnair’s strategy to win in dynamic • Taken delivery of five A321 Sharklets times and retired our small B757 fleet • Our methodology for entering new – Operating cost advantage from commonality routes • Established our baseline long-haul fleet plan – Allows for more/less growth based on market conditions

25 © Finnair | Capital Markets Day, 22 May 2014 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?

26 © Finnair | Capital Markets Day, 22 May 2014 Schedule Structure A Passenger Friendly Hub

27 © Finnair | Capital Markets Day, 22 May 2014 Helsinki offers Finnair a competitive advantage...

HEL LHR FRA AMS CDG

Ease of transfer

Uncongested airspace

Runway capacity

Cost competitiveness

Geographic location to Asia

Departure punctuality

28 © Finnair | Capital Markets Day, 22 May 2014 ...but our growth has created some congestion

ASIA & NORTH AMERICA

0700 12001700Hub 2000 2400 congestion

EUROPE & DOMESTIC Europe double daily flights (incl. double daily+ markets) Asia afternoon bank Asia midnight bank Overnighting DOM flights

29 © Finnair | Capital Markets Day, 22 May 2014 Main bank feeder flights spilling

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

30 © Finnair | Capital Markets Day, 22 May 2014 Opportunity: four bank structure

ASIA & NORTH AMERICA

0700 12001700 2000 2400

EUROPE & DOMESTIC Europe 4 times per day flights (incl. domestic) Asia afternoon bank Asia midnight bank Asia evening bank and North America midday bank Overnighting DOM flights Potential to add two new European banks at 12:00 and 20:00 31 © Finnair | Capital Markets Day, 22 May 2014 Four bank structure would defend our position in Helsinki hub Departures 300 200 100 0 landings -100 -200 Arrivals Weekly take offs and take Weekly -300 67891011121314151617181920212223 Hour Two Banks Four Banks

• 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 © Finnair | Capital Markets Day, 22 May 2014 Four bank structure would enable growth and deliver additional benefits

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

33 © Finnair | Capital Markets Day, 22 May 2014 Joint Business Agreements Friends In High Places

34 © Finnair | Capital Markets Day, 22 May 2014 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

35 © Finnair | Capital Markets Day, 22 May 2014 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

36 © Finnair | Capital Markets Day, 22 May 2014 But Is AJB Worth Anything?

Share of passengers by Marketing Finnair North Atlantic Traffic Carrier on Finnair North Atlantic RASK & Load Factor Development Traffic 100 % 4,70 86% 4,60 84% 80 % 4,50 82% 4,40 60 % 4,30 80% 4,20 40 % 78% 4,10 76% 20 % 4,00 RASK* (€ Cent) 3,90 74% 0 % 3,80 72% 2011 Q4 2012 Q4 2013 Q4 2011 Q4 2012 Q4 2013 Q4

AY AA BA IB PLF% RASK

*RASK: Ticket Revenue with YR and Transfer Payments

37 © Finnair | Capital Markets Day, 22 May 2014 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

38 © Finnair | Capital Markets Day, 22 May 2014 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

39 © Finnair | Capital Markets Day, 22 May 2014 For Finnair, SJB Is Both Defensive And Offensive Seats Europe - Japan • Alignment with Japan Airlines protects Japan POS revenue 35% 30%

• SJB becomes the largest Siberian joint 25% venture 20% – Strongest partners – Best hubs 15%

– Most commercial relevance 10%

5% • Larger presence will support revenue shift from unaligned carriers Market share in EUR-JP vv Traffic* 0%

* Source: SRS Q2 2014.

40 © Finnair | Capital Markets Day, 22 May 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

41 © Finnair | Capital Markets Day, 22 May 2014 Route Development Friends Can Only Take You So Far

42 © Finnair | Capital Markets Day, 22 May 2014 Finnair Has Steadily Grown Its Network in Asia 2000

ASK (M) Destinations 2 056 3

43 © Finnair | Capital Markets Day, 22 May 2014 Finnair Has Steadily Grown Its Network in Asia 2005

ASK (M) Destinations 6 176 6

44 © Finnair | Capital Markets Day, 22 May 2014 Finnair Has Steadily Grown Its Network in Asia

2010

ASK (M) Destinations 11 150 9

45 © Finnair | Capital Markets Day, 22 May 2014 Finnair Has Steadily Grown Its Network in Asia

2014

ASK (M) Destinations 15 463 15

46 © Finnair | Capital Markets Day, 22 May 2014 Are There Any Opportunities Left?

Yes! 1. China 2. Russia 3. Additional Pacific Rim Growth 4. North America

47 © Finnair | Capital Markets Day, 22 May 2014 China Is Still Largely Untapped

Cities with non-stop service to Cities with no non-stop service to Europe (S 2014) Europe

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

48 © Finnair | Capital Markets Day, 22 May 2014 Source : Wikipedia New Russian destinations: Potential to improve Utilization and Support the Bank Structure

Schedule Departure Arrival to from HEL HEL

22-23 06-07

49 © Finnair | Capital Markets Day, 22 May 2014 There Are Still A Number Of Underserved Cities In The Pacific Rim

50 © Finnair | Capital Markets Day, 22 May 2014 AJB Provides Opportunities For Profitable North America Operations

51 © Finnair | Capital Markets Day, 22 May 2014 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

52 © Finnair | Capital Markets Day, 22 May 2014 Bottom Line...

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

...not simply for the sake of growth!

53 © Finnair | Capital Markets Day, 22 May 2014 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

54 © Finnair | Capital Markets Day, 22 May 2014 Thank you! Questions?

55 © Finnair | Capital Markets Day, 22 May 2014 Commercial Strategy Closing the Revenue Gap

Chief Commercial Officer Allister Paterson Finnair Capital Markets Day, 22 May 2014

56 © Finnair | Capital Markets Day, 22 May 2014 Our role is to capture Finnair’s portion or ‘Fair Share’ of the total market* 0.2%

3.8% Home market 30.9% 13.7%

25.9% Europe North 23.7% America Asia Pacific

A global industry: • Finnair participates in three global passenger flow markets • Finnair has a minimal effect on total pax market size *FY 2013.

57 © Finnair | Capital Markets Day, 22 May 2014 We have identified annual revenue opportunity of MEUR 80 = 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.

58 © Finnair | Capital Markets Day, 22 May 2014 We focus leveraging core strengths into revenue performance

Customer Shortest and fastest Asia-Europe route Network Well established in European markets

Early mover in Asian secondary cities

Highest worldwide safety ranking

Loyal home market customer base One of world's most on-time airlines

Strong Nordic brand appeal Helsinki airport hub

Operational Performance oneworld alliance member

59 Our new Commercial Strategy focuses on delivering revenue from:

1 Smart Product Investments

2 Leveraging Technology - "Digital Finnair"

3 Revenue Science Expertise

60 © Finnair | Capital Markets Day, 22 May 2014 1 Smart Product Investments

Introduced 2013–2014

Signature meals Marimekko amenities Expanded In-flight Full flat seats - entertainment Route guarantee

61 © Finnair | Capital Markets Day, 22 May 2014 In the pipeline – coming soon

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

62 © Finnair | Capital Markets Day, 22 May 2014 2 Leveraging technology– Digital Finnair

Enhanced Sales Applications Customer Experience Applications • Online flight/ancillary revenues • Distributed IFE to personal devices • High utility mobile applications • Enhanced onboard revenues • CRM offers & airline services

63 © Finnair | Capital Markets Day, 22 May 2014 Driving Demand and Optimizing Revenue - Revenue Science Expertise

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

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

64 © Finnair | Capital Markets Day, 22 May 2014 Driving demand: oneworld & JBAs help overcome Finnair’s small home market

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

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

65 © Finnair | Capital Markets Day, 22 May 2014 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

66 © Finnair | Capital Markets Day, 22 May 2014 Thank you! Questions?

67 © Finnair | Capital Markets Day, 22 May 2014 Differentiated cargo strategy – Driving Asian growth Juha Järvinen, Managing Director, Finnair Cargo Finnair 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?

69 © Finnair | Capital Markets Day, 22 May 2014 Cargo is a significant revenue generator in Finnair's long haul traffic

• Belly Cargo generates 17% of Finnair’s revenue on Main shipment types intercontinental routes and 11% of Airline business turnover* 2 % 2 % 1 % 12 % • Relative importance will grow as the A350 brings up to 11 % 50% more belly cargo capacity by 2020

• Cargo supports our goal to double Asian revenues by 79 % 2020

Turnover 147,000 General Cargo Perishable 238 MEUR Freight Mail Dangerous goods (2013) tonnes Pharma Other special cargo

*Q1 2014.

70 © Finnair | Capital Markets Day, 22 May 2014 Mega trends and macro dynamics support our growth strategy 2010 Shipment flows: Europe – Middle East/Asia 2020E (RTK’s/yr)

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

CAGR +5.7%

Finnair operates in key freight trade lanes & growth markets in Asia, China's including West & Central China and top 3 hubs Vietnam

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

SIN

*Source: IATA

© Finnair | Capital Markets Day, 22 May 2014 China forecast to become the second largest freight market by 2017* Directionally balanced freight growth Urban clusters in China and their hub cities • Fast growing middle class population and consumerism in China drive cargo growth: Changchun- Harbin Jingjinji – High-end consumer goods from Europe/US Liao central- Huhehaote south – Healthcare & Pharmaceuticals Taiyuan Shandong Central Guanzhong BylandHefei – Infrastructure investments Yangzi mid-lower Nanjing Chengdu Shanghai • New administration committed to Chongqing Hangzhou Nanchang development of Western & Central Changzhutan Coast West Kunming regions Shenzhen Guangzhou (includes Foshan) – Lower production costs will drive re- Nanning location and growth of manufacturing in the Central and Western regions *Source: IATA Source: Dominic Barton, 2013. 72 © Finnair | Capital Markets Day, 22 May 2014 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

73 © Finnair | Capital Markets Day, 22 May 2014 Commercial focus in product portfolio and revenue optimisation

Product Portfolio Design Revenue Optimization & CRM

• Transformation from bulk general cargo • Growth of global belly capacity will result in carrier into specialized segmented service excess supply of cargo capacity delivery • Professional Revenue management and • Considerable growth potential in three pricing is a necessity to optimize cargo specific air freight segments revenues – Perishables (Seafood, fresh food) • Majority of Cargo Sales comes through GSA – Healthcare & Pharmaceuticals partners (60-70%) – E-Commerce trade parcels • Global & Regional key account management • Growing Asian demand for high quality and CRM focus increases Pharmaceuticals and European fresh food • Growth of e-commerce trade with fast B2C/B2B deliveries globally

74 © Finnair | Capital Markets Day, 22 May 2014 Growing cargo opportunity in Pharmaceuticals

• Belgium and Germany are driving Pharmaceutical export growth in Europe

• Global sourcing and distribution of Pharma favours Air Cargo

Source: Seabury

75 © Finnair | Capital Markets Day, 22 May 2014 Differentiated product strategy balances flows and enables growth in higher value shipments

• 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

• Total revenue to/from Central Europe +35% after Brussels cargo hub launch Target of • Currently accounts for more than 20% of Finnair 1 MEUR monthly Cargo’s total revenue (approx. 50 MEUR p.a.) belly contribution by 2015 • Finnair is larger than Cathay Pacific, 2014 China Airlines & China Eastern Cargo in German exports October 2013 th • Finnair is now 20 150-200 tonnes weekly to/from largest export carrier BRU cargo hub to Asia in Belgium April 2013- Finnair Change, Rank March 2014 Tonnage % y-o-y

April 2013 Belgium 2,529 252 % 20 Start of Brussels cargo hub Germany 10,941 20 % 28

• 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

Erno Hildén, CFO Finnair Capital Markets Day, 22 May 2014

29 15 narrowbodies widebodies Owned / Finance leased Owned / Finance 9 AIRBUS A319 10 AIRBUS A320 10 AIRBUS A321 7 AIRBUS A340 8 AIRBUS A330 82 Avg. age 12.7 years Avg. age 11.6 years Avg. age 8.0 years Avg. age 11.2 years Avg. age 4.4 years © Finnair | Capital Markets Day, 22 May 2014 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

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

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

*Airbus estimate

Front Business compartment Flex compartment

Convertibility allows +/- 10% capacity adjustment

Long-haul fleet plan 25 35 000

30 000 20 20 19 18 17 25 000 16 15 15 15 15 15 15 13 20 000

15 000 10

10 000 Number of aircraft 5 5 000 Widebody ASKs (millions)

0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

• 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

• Ability to produce positive operational cash flow Positive operational cash flow even through the most challenging years in the industry* *2009 has been the only exception since 1997

• Target cash-to-sales 15-20% Maintaining high liquidity • 5-year senior bond with competitive margin • Undrawn 180 MEUR revolving credit facility through the cycle • Commercial paper program provides additional liquidity, if needed

• The current low indebtedness facilitates higher Strong credit with additional leverage potential by utilizing new aircraft as debt capacity collateral • Current asset base mostly unencumbered

• Duration diversification to minimize short and Hedging strategy and mid-term volatility of jet fuel and F/X funding diversification • Diversified funding base to secure availability and low cost of funding 88 © Finnair | Capital Markets Day, 22 May 2014 New aircraft investments require capital 11 Airbus 350 XWBs on firm order*

Aircraft investments and loan Cumulative outflow repayments 2014 – 2018, MEUR 2014 – 2018, MEUR

450 1600

400 1400

350 Aircraft investments (incl PDP) 1200 Committed financing of 300 Loan repayments ~MEUR 300 by Q4/15 1000 250 800 200 600 150 100 400 50 200 0 0 2014 Q2‐Q4 2015 2016 2017 2018 2014 Q2‐Q4 2015 2016 2017 2018

*Finnair also has options for an additional 8 A350s

• 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

90 © Finnair | Capital Markets Day, 22 May 2014 Strong financial position supports business development and future investments

Strong cash position Strong balance sheet MEUR %

120

600 100 80 450 60 300 40

150 20

0 0 2010 2011 2012 2013 Q1_2014 2010 2011 2012 2013 Q1_2014 -150 Net cash flow from operations Equity ratio Gearing Adjusted gearing Investments, gross Short term cash and cash equivalents

91 © Finnair | Capital Markets Day, 22 May 2014 Finnair indebtedness among the lowest in the sector Adjusted gearing on selected European carriers FY 2013 – Finnair accounting principles 600%

500%

400%

300%

200%

100%

0% Norwegian AF-KLM SAS*) IAG AY Lufthansa

*) Includes IAS19 restatement & Preference Share Issue

Total Fleet: 77 aircraft*

51% leased & encumbered 49% unencumbered

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

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

• 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

Bridge to Q1 2014 CASK € cents / ASK 6,0 5,8 5,6 5,4

5,2 -4,0% 5,0 -3,9% 4,8 -2,0% -1,5% 4,6 -1,2% 5,07 -1,2% 2,4% -14,1% -1,1% 4,4 -0,6% -0,6% -0,1% 0,0% 4,2 4,36 4,0

* Includes purchased traffic from Flybe

RASK & CASK Development Airline business, % change 2013 vs 2010

RASK 0,3 CASK -2,1 CASK (ex-fuel) -12,5 Fuel 29,6 Staff Costs -8,4 Depr. & Lease Exp -20,7 Traffic Charges -3,8 Mx -17,1 Ground Hdlg -17,9 Catering -11,5 Other Exp -9,4

% 97 © Finnair | Capital Markets Day, 22 May 2014 Asian traffic forecast to grow with wide body fleet Far East Asia traffic Millions of ASKs 25 000

20 000

15 000

10 000

5 000

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

98 © Finnair | Capital Markets Day, 22 May 2014 ...as are revenues from Asian traffic, targeting doubling the revenue from 2010 Total revenues from Asia traffic MEUR 2 500

2 000

1 500

1 000

500

0 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.”

Improvement in RASK and CASK, 2015-2020

2015 2016 2017 2018 2019 2020 EBIT 4,0% 6,0% 6,0% 6,0% 6,1% 6,1% margin 1,0 % 1,0 % 1,0 % 1,0 % 1,0 % 0,3 % 0,3 % 0,3 % 0,3 % 0,0 % 0,0 % 0,0 % 0,0 % 2,0 % -0,1 % -0,1 % -3,0 % -3,0 % -2,5 % -3,5 % -3,5 % -0,5 % -4,0 % -4,0 %

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

• 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

• 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

• Competitive cost structure and cost Growth savings 2016 

• Topline growth & closing the identified 2015 revenue gap Revenue enhancement A350s • A350s entry into service

• Growth by building on our existing 2014 strengths Cost savings