Market environment and strategy
Mika Vehviläinen CEO
1 Finnair Capital Market Day, 3 Dec 2012 Finnair’s vision
Double our revenue between Europe and Asia by 2020
Become the most desired option in travel between Europe and Asia
Become number one airline and grow in the Nordic countries
2 Finnair Capital Market Day, 3 Dec 2012 Finnair offers the fastest connections between
over 50 1112 Asian European mega-cities destinations Tokyo Nagoya Osaka Beijing Chongqing Shanghai Hong Kong Seoul Bangkok Singapore Delhi
Hanoi from June 2013
3 Finnair Capital Market Day, 3 Dec 2012 Gateway to Europe for our Asian customers
Malaga Barcelona
London Brussels Rome Manchester
Budapest
Gothenburg
Oslo Stockholm Vilnius
HELSINKI
St. Petersburg
4 Moscow Finnair Capital Market Day, 3 Dec 2012 Finnair has strong presence in Asian key economies, weekly frequencies*
China Japan
50 28 24 21 34 27 29 16 24
Finnair Lufthansa Air France KLM Finnair Lufthansa Air France KLM IAG
Singapore Republic of Korea
12 13
7 77 77 6
Finnair Lufthansa Air France KLM Finnair Lufthansa Air France KLM
• *Finnair is the 3rd largest carrier in its destinations, estimated market share of 5.9%. Winter schedule. • Market size of 20 million transfer passengers annually, globally one of the fastest growing traffic areas. • Traffic between Europe and China forecasted to triple during the next 30 years.
Finnair Capital Market Day, 3 Dec 2012 5 Air traffic remains a growth market
20-year world annual traffic growth 4.7%
Source: Airbus Global market forecast September 2012. 6 Finnair Capital Market Day, 3 Dec 2012 Global ASK traffic now growing at a slower pace after a strong recovery in 2010
Source: Airbus Global market forecast September 2012. 7 Finnair Capital Market Day, 3 Dec 2012 Growth is highest in expanding regions...
Yearly RPK growth China 2012 -2031 India Middle East Asia Africa 6 billion people
REGIONS CIS EXPANDING Latin America 2012 Eastern Europe
Western Europe 1 Japan billion North America people 2012
Billions of people increasingly want to travel by air
Source: Airbus Global market forecast September 2012. 8 Finnair Capital Market Day, 3 Dec 2012 ...following strong economic growth in these areas – China is forecasted to continue as the fastest growing market in 2012-2013
Source: Airbus Global market forecast September 2012. 9 Finnair Capital Market Day, 3 Dec 2012 Main drivers for traffic growth in Asia
• More people, bigger cities, more wealth
• Emerging markets, more first time flyers and growing middle class
• Growing tourism and internationalisation will stimulate demand
• China average propensity to travel x4.6 in 2031 vs. 2011
Source: Airbus Global market forecast September 2012. 10 Finnair Capital Market Day, 3 Dec 2012 Change in the industry continues
• Alliance landscape is changing – Qatar to join oneworld alliance, Middle-Eastern airlines active in partnering with legacy carriers
• Market exits in short haul traffic
• Legacy carriers continue to restructure their loss-making short haul operations
11 Finnair Capital Market Day, 3 Dec 2012 Finnair today
Passenger Revenue split in Q3 2012
7% • Focus on core Airline business 5% – Scheduled long and short haul traffic 5% – Leisure traffic – Cargo traffic 51% 32%
Asia Europe • Partnerships in both core Domestic North Atlatic business and in airline support Charter services
12 Finnair Capital Market Day, 3 Dec 2012 We are committed to adding value and increasing profitability
• Product development, for example: – Investments in Customer Service – Peace of Mind – Better meals through partnership – New ticket types – Marimekko partnership etc.
• Improved operational efficiency • Cutting costs and changing cost structure • Increasing revenues
13 Finnair Capital Market Day, 3 Dec 2012