1. Financial Report 1 January – 31 December 2009
Finnair Group
Financial Report 1 January – 31 December 2009

2. Sector difficulties continue
The overcapacity is still growing
Aircraft are underutilised
Passenger demand is showing first signs of growth
Price pressure remains high
Cargo demand improving, price level rising slightly
Oil price has risen 30% since last summer
Annus Horribilis – IATA estimates 11 billion dollar loss for last year
Decennis Horribilis – sector losses totalled 50 billion dollars in 2000–2009
Loss forecast for current year 5.6 billion dollars

3. Finnair’s profitability declined
Sector troubles also burden Finnair
Turnover fell last year by 20%
Operational loss 180 million euros
Ticket prices down by 12%, in the latter part of the year 10%, cargo prices -30% and last quarter -27%
Passenger load factor remained good
Capacity adjusted to volume decline; cost level still too high compared with price level
Efficiency programme improved result by 100 million euros
Pilot strike and walkout by baggage handling workers is estimated to cause company >20 million euros in losses
Finnair still has strong balance sheet and cash position
Punctuality and customer satisfaction improved despite difficulties at end of year

4. Very poor operational result for 2009
2008
Change %
Turnover
mill. euro
1,838
2,256
-18.5
Operational expenses
2,038
2,278
-10.5
Adjusted EBITDAR*
11.9
173.5 -
Adjusted EBIT* i.e. Operational result
-180.2
0.8
One off items/ capital gains
0.7
-1.3
Fair value changes of derivatives
55.5
-57.4
Operating profit/loss (EBIT)
-124.0
-57.9
Profit before tax
-133.7
-62.2
*excl. capital gains. fair values changes of derivatives and non recurring items

5. Loss diminished towards the end of the year
EBIT* per quarter
MEUR
MEUR
2006
2007
2008
2005
2009
Liikevoiton muutos vuosineljänneksittäin (ilman käyttöomaisuuden myyntivoittoja. johdannaisten käyvän arvon muutoksia ja järjestelykuluja)
*excl. capital gains. fair value changes of derivatives and non recurring items

6. Unit costs develop in the right direction
Change YoY
Yield (EUR/RTK)
Unit costs (EUR/RTK) %
2005
2006
2007
2008
2009

7. Savings materialise 2009 Q4/09 Unit costs of flight operations* c/RTK
-2.4%
-7.0%
Unit costs of flight operations* excl. fuel
0.8%
-2.2%
Personnel expenses
-4.3%
-15.4%
Fuel costs
-10.6%
-19.7%
Traffic charges
+0.5%
-8.2%
Ground handling and catering
€/psgr.
-1.7%
-4.9%
Sales and marketing
-13.7%
-1.1%
Aircraft lease payments and depreciation
+15.0%
+18.3%
Other costs*
+4.5%
+3.3%
* excluding fair value changes of derivatives and non-recurring items
RTK = Revenue Tonne Kilometre

8. 200 million euro efficiency program
Savings target in personnel costs totalling 120 million euros
Targets of close to 150 mill. euro identified or agreed upon
Fuel efficiency
Structural and operational changes
Temporary lay-offs continue
Number of staff decreased by 1650
Stabilisation agreements in Technical Services, Catering and cabin service
Reduction of unit costs agreed upon in pilots’ collective agreement
100 mill. euro impact on profitability already in 2009
Structural impact of the program per annum 110 mill. euro

9. Headcount 1650 less than year before
Personnel
Personnel on average

10. Fuel price on rise

11. Hedges smoothened fluctuation in 2009

12. Hedging losses decreased in Q4

13. Finnair has a rolling hedging policy

14. One of the most modern fleets in the world
Average age of Finnair's entire fleet is around six years
Modern fleet consumes less fuel and produces less emissions
Last Boeing MD-11 aircraft will be withdrawn from Finnair traffic on 22 February 2010
Having fewer aircraft types brings commonality benefits
Three of seven Boeing 757 aircraft will be withdrawn this spring
Two Embraer 170 planes leased, two for sale
In the early 2010, two new Airbus A330 aircraft, one more in late 2010

15. Funding secured Funding of Finnair investment programme ensured
Investment schedule relaxed
Cash reserves more than 600 mill. euros
Sale and lease-back of properties and a spare engine, 90 mill. euros
European Investment Bank, 180 mill. euros
Export Credit Agencies, 1 A330 plane on financial leasing
An emitted hybrid bond of 120 mill. euros lowers gearing
Funding sources totalling 600 mill. euros
Export Credit Agencies, 2 A330 planes on financial leasing
Loan-back of TyEL pension fund reserves, 330 mill. euros remaining
Liquidity reserve unused credit facility, 200 mill. euros
In addition, 200 million euro commercial paper programme, of which 120 in use

16. Strengtened cash in Q4 Cash flow statement
Q1-Q4/2009
Q1-Q4/2008
Cash flow from operations
mill. euro -7
-121
+120
Investments and sale of assets
+10
-265
-186
Investments -9
-348
-233
Change of advances and others
+19
+83
+47
Cash flow from financing
+300
+601
-82
Liquid funds at the beginning
304
392
540
Change in liquid funds
+303
+215
-148
Liquid funds* at the end
607
*incl. financial interest bearing assets at fair value

17. Balance sheet made stronger Equity ratio and adjusted gearing%
Equity ratio
Adjusted Gearing

18. Emissions trading raises questions
EU begins air transport emissions trading unilaterally in 2012
Free emissions rights to be received by each airline for will be based on this year’s revenue tonne kilometres
Risk of changing ground rules exists
Finnair has supplied the necessary documentation to TraFi
Current emissions trading model will increase carbon leakage risk and jeopardise EU competitiveness
Finnair supports sector-specific emissions trading which is global and does not distort competition

19. Industrial action and weather disrupted traffic at turn of the year
In December, illegal walkout by loading workers
Over 80% of baggage handled normally
flights delayed and some cancelled
further disruptions after walkout
nearly 7 million euros in losses
In January, Central European weather disrupted air traffic
turn of the year challenging due to large passenger numbers, terminal change and problematic weather
baggage congested at all European airports

20. Finnair still on top in punctuality

21. Challenging start for the year
Slow pick-up in passenger and cargo demand
Business travel demand growing outside Finland, but at lower price levels
Passenger traffic capacity in early 2010 will be 10% less than in 2009
First quarter clearly loss-making
Three new Airbus A330 long-haul aircraft
Funding for investments arranged
Efficiency programme and structural change to be continued
Profitability expected to improve towards end of the year

22. Finnair's strategy working
Asia-Europe strategy based on Via Helsinki concept is working; geographical advantage a lasting competitive advantage
Growing affluence in Asia presents huge growth potential
Passenger numbers have grown from 0.3 million in 2001, to over 1.1 million in 2009
Finnair's Asian traffic accounted for 3.7% of Finland's GDP growth in 2002–2007
Created more than 4,000 jobs in Finnair alone
8,000 new jobs by 2015
Without Asian strategy, company would be only half of present size
Modern fleet
Indicators show operational and service quality at a high level

23. Towards future growth
Customers of the future will increasingly come from Asia
Strategy update and supporting reforms during the spring – main strategy will not change
Competitiveness based on excellent product and efficient operations
Group structure focused on core functions in order to achieve flexibility, partners supplement network and service provision
Working toghether with personnel, to reach joint objectives
Sustainable development creates added value for environment-conscious customers

24. Appendices

25. Weak operational result for Q4
Change %
Turnover
mill. euro
457.7
579.0
-20.9
Operational expenses
504.1
600.6
-16.1
Adjusted EBITDAR*
10.2
22.6 -
Adjusted EBIT* i.e. Operational result
-39.4
-13.7
One off items/ capital gains
-7.9
-3.8
Fair value changes of derivatives
4.2
-43.8
Operating profit/loss (EBIT)
-43.1
-61.3
Profit before tax
-45.4
-62.0
*excl. capital gains. fair values changes of derivatives and non recurring items

26. Segment results* Mill. euro Q4/2009 Q4/2008 Airline Business -47.1
-23.0
Aviation Services
9.9
5.0
Travel Services
1.2
5.3
Unallocated items
-3.4
-1.0
Total
-39.4
-13.7
* Operating profit. excluding capital gains, fair value changes of
derivatives and non restructuring items

27. Segment results* Mill. euro Q1-Q4/2009 Q1-Q4/2008 Airline Business
-170.5
-19.4
Aviation Services
7.3
13.8
Travel Services
-4.3
12.3
Unallocated items
-12.7
-5.9
Total
-180.2
0.8
* Operating profit. excluding capital gains, fair value changes of
derivatives and non restructuring items

28. Negative trend in profitability levelled off thanks to efficiency measures
Change in EBIT* per quarter
MEUR
Liikevoiton muutos vuosineljänneksittäin (ilman käyttöomaisuuden myyntivoittoja. johdannaisten käyvän arvon muutoksia ja järjestelykuluja)
2004
2005
2006
2007
2008
2009
*excl. capital gains, fair value changes of derivatives and non recurring items

29. ROE and ROCE Rolling 12 months%
ROE
ROCE

30. Unit costs develop in the right direction
Change YoY
Yield (EUR/RTK)
Unit costs (EUR/ATK) %
2004
2005
2006
2007
2008
2009

31. Unit costs by cost components
2009
Q4/09
Unit costs of flight operations*
c/ATK
+0.8%
+1.0%
Unit costs of flight operations* excl. fuel
+4.2%
+6.3%
Personnel expenses
-1.0%
-10.0%
Fuel costs**
-8.0%
-13.1%
Traffic charges
+3.5%
-0.6%
Ground handling and catering
€/psgr.
-1.7%
-4.9%
Sales and marketing
-13.7%
-1.1%
Aircraft lease payments and depreciation
+18.5%
+28.5%
Other costs*
+9.5%
+13.0%
* excluding fair value changes of derivatives and non-recurring items
ATK = Available Tonne Kilometre

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

33. Aircraft operating lease liabilities
MEUR
Flexibility. costs. risk management
On 31 December all leases were operating leases. If capitalised using
the common method of multiplying annual aircraft lease payments by
seven, the adjusted gearing on 31 December 2009 would have been
86.9%

34. Finnair Financial Targets
”Sustainable value creation”
Operating profit (EBIT)
EBIT margin at least 6% => over 120 mill. € in the coming few years
EBITDAR margin at least 17% => over 350 mill. € in the coming few years
EBITDAR
Economic profit
To create positive value over pretax WACC of 8.25%
Adjusted Gearing
Gearing adjusted for aircraft lease liabilities not to exceed 140 %
Pay out ratio
Minimum one third of the EPS

35. 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

36. www.finnair.com/group Finnair Group Investor Relations
tel:
fax: