Interim Report 1 January – 31 March 2007 Finnair Group Interim Report 1 January – 31 March 2007

An encouraging start to the year Scheduled Passenger Traffic demand strong, particularly from Asia Finnair’s market share growing in international traffic from Finland Unit costs fell Passenger traffic profitability improved Finnair Technical Services and FlyNordic also clearly better than previous year Fuel price stable, but on a high level FlyNordic joins Norwegian Air Shuttle, creating a strong Scandinavian airline

Finnair sold FlyNordic to Norwegian Memorandum of Understanding in April, final deal during Q2/07 Payment in shares, Finnair’s holding in Norwegian Air Shuttle rises to more than five per cent An option allows Finnair to increase its ownership to around ten per cent by end of 2008 FlyNordic’s charter traffic revenue divided 50/50 until October 2008 Cooperation agreement between Finnair and Norwegian in Asian feeder traffic

Efficiency programme takes shape Target EUR 80 million, of which half is personnel expenses Efficiency areas specified in full Savings weighted towards end of year Profit impact for 2007 around EUR 40 million Full financial impact will begin in 2008 Personnel reductions to date ~300; total in 2007, ~600 More than 200 people recruited into Flight Operations Total number of employees stays nearly the same

Key efficiency areas Technical Services competitiveness programme Flight personnel agreements Savings from support functions More efficient crew utilisation through network reform Management of exceptional situation processes Feeder traffic reform Mergers in travel agency network (SMT+Area) Cutting distribution costs

Fuel costs a fifth of turnover 2007: ~20% of turnover at current price level and planned traffic growth Finnair scheduled traffic has hedged 70% of its fuel purchases for the next six months, thereafter for the following 30 months with a decreasing level. Finnair leisure flights hedged 60% of summer traffic programme’s consumption.

Higher jet fuel prices anticipated

Passenger traffic and Technical services profitability improved Q1/2007 Q1/2006 Change % Turnover mill. € 528.5 480.3 10.0 EBITDAR 54.8 40.9 34.0 EBIT excl. capital gains, fair values changes of derivatives and reorganization of expenses 5.8 -5.1 - Capital gains 1.9 0.0 Fair value changes of derivatives 6.0 -0.1 Operating profit/loss (EBIT) 13.7 -5.2 Profit after financial items 13.4

Unit costs decreased Change YoY % Yield (EUR/RTK) Unit costs (EUR/ATK) 2006 2002 2003 2004 2005 2007

Fuel costs even out Unit costs of flight operations* c/ATK Q1/2007 2006 Unit costs of flight operations* c/ATK -2.1% +1.8 % Unit costs of flight operations excl. fuel* c/ATK -3.7% -3.5 % Personnel expenses c/ATK +0.2% -4.1 % Fuel costs c/ATK +3.6% +24.1 % Traffic charges c/ATK +1.1% -3.9 % Ground handling and catering €/passenger +1.7% -1.0 % Sales and marketing €/passenger +16.0% -7.9 % Aircraft lease payments and depreciation c/ATK -3.9% +1.9 % Other costs c/ATK -7.6% -3.1 % * excluding fair value changes of derivatives ATK = Available Tonne Kilometre

Business growing, operations systematically rationalised Personnel Personnel on average

Productivity improved

Liquid funds used for investments Cash flow January-March Cash flow statement (EUR mill.) Q1/2007 Q1/2006 Cash flow from operations 1 - 33 Investments and sale of assets -58 -20 Investments -52 -49 Change of advances and others -6 -29 Cash flow from financing Change in liquid funds -63 -59 Liquid funds at the beginning 273 339 Liquid funds at the end 210 280

Strong balance sheet Equity ratio and adjusted gearing % Equity ratio Adjusted Gearing

Expansion to Asia continues Demand grew during Jan-Mar07 by 35.4%, passenger numbers 29.9%, cargo 19.7% Passenger load factor 36.8%, business class demand grew by 38.8% Asian revenues increased by over 40% This year sees Indian traffic quadrupled, new destination Mumbai This summer 59 flights a week to Asia Non-stop flights to 10 destinations, six out of which daily Growth in different markets in Asia diversifies risk Capacity will grow by over 30% this year

Long-haul network – 2001 number of weekly frequencies Tokyo 2 7 New York Beijing 3 Helsinki Bangkok 4 Singapore 4

Long-haul network – summer 2007 Tokyo 4 Nagoya 4 7 New York Osaka 7 Beijing 7 Shanghai 7 Guangzhou 4 Hong Kong 7 Helsinki Bangkok 7 Delhi 7 Mumbai 5

Share of Asian traffic growing Scheduled traffic passenger and cargo revenues Q1/2007 Domestic Europe Asia America

Most modern European fleet Average age of European fleet below four years 29 Airbus A320 family aircraft New Embraer 170/190 aircraft increase flexibility and load factors, decrease costs and are eco-efficient A total of ten smaller and two larger Embraer in fleet, eight larger aircraft coming A fleet of eight wide-bodied aircraft Two new Airbus A340 aircraft annually 2007-2008

oneworld energized oneworld a high quality and only profitable alliance. Three new members as of April 1st Japan Airlines, largest in Asia and the Pacific region Royal Jordanian, complementing our network in growing Middle-East market Hungary´s Malev will serve as partner in Central Europe

Appraisal of future development High degree of hedging will stabilise fuel costs in latter part of year Renewal of wide-bodied fleet will begin New route openings will impose temporary pressure on Asian traffic load factors Two MD-11 and four ATRs will be sold Unit costs will decline further Restructuring will proceed, results already visible New collective employment agreements in autumn, negotiations already under way Potential to exceed 2005 operational result

Appendices

Profitability is back Change in EBIT per quarter (Excluding capital gains, fair value changes of derivatives and reorganization expenses) MEUR Liikevoiton muutos vuosineljänneksittäin (ilman käyttöomaisuuden myyntivoittoja, johdannaisten käyvän arvon muutoksia ja järjestelykuluja) 2002 2003 2004 2005 2006 2007

Average yield and costs EUR c/RTK & EUR c/ATK Yield (EUR/RTK) Unit costs (EUR/ATK) 2002 2003 2004 2005 2006 2007

Aviation Services on black Excluding capital gains, fair value changes of Derivatives and reorganization expenses 2007 2006 Q1 MEUR Scheduled Passenger Traffic -0.3 -4.4 Leisure Traffic 5.6 6.2 Aviation Services 3.3 -3.6 Travel Services 1.3 0.3 Unallocated items -4.1 Total 5.8 -5.1

Investments and cash flow from operations MEUR Operational net cash flow Investments

Aircraft operating lease liabilities MEUR Flexibility, costs, risk management On 31 March all leases were operating leases. If capitalised using the common method of multiplying annual aircraft lease payments by seven, the adjusted gearing on 31 March 2007 would have been 116,5%

ROE and ROCE Rolling 12 months % ROE ROCE

Emissions trading for air traffic EU air traffic accounts for only 0.5% of all CO2 emissions in the world Finnair in favour of emissions trading principles EU proposal sets airlines at somewhat unequal footings depending on route network structure Should be global Competitively neutral Investments already made in new technology should be taken into account Open emissions trading

Customers can already make environmental choices when flying Choose an airline with a modern fleet Fly in the right direction all the way, without unnecessary stopovers. Shorter flight routes result in less emissions Avoid large, congested airports By making these choices, fuel consumption and emissions can drop by at best 30%!

Finnair Financial Targets ”Sustainable value creation” Operating profit (EBIT) EBIT margin at least 6% => 110-120 mill. € in the coming few years EBITDAR margin at least 17% => over 300 mill. € in the coming few years EBITDAR To create positive value over pretax WACC of 8% Economic profit Gearing adjusted for aircraft lease liabilities not to exceed 140 % Adjusted Gearing Pay out ratio Minimum one third of the EPS

Finnair’s Financial Targets Description of targets Operating profit (EBIT) Turnover + other operating revenues – operating costs Result before depreciation, aircraft lease payments and capital gains EBITDAR Economic profit Operating profit EBIT – Weighted Average Cost of Capital Adjusted Gearing Interest bearing debt + 7*Aircraft lease payments – liquid funds) / (Equity + minority interests) Pay out ratio Dividend per share / Earnings per share

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