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

2. 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

3. 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

4. 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

5. 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

6. 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.

7. Higher jet fuel prices anticipated

8. 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

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

10. 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

11. Business growing, operations systematically rationalised
Personnel
Personnel on average

12. Productivity improved

13. 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

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

15. 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

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

17. 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

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

19. 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

20. 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

21. 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

22. Appendices

23. 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

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

25. 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

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

27. 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%

28. ROE and ROCE Rolling 12 months%
ROE
ROCE

29. 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

30. 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%!

31. Finnair Financial Targets
”Sustainable value creation”
Operating profit (EBIT)
EBIT margin at least 6% => 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

32. 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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