Finnair Group Interim Report 1 January – 31 March 2016

Regulatory News:

Finnair (HEX:FIA1S):

Comparable operating result improved by 13 million euros in the seasonally weakest quarter

January–March 2016

• Revenue grew by 2.9% year-on-year to 536.4 million euros (521.3).
• Comparable operating result was -15.3 million euros (-28.4).
• Comparable EBITDAR was 36.4 million euros (19.2).
• Net cash flow from operating activities stood at 10.4 million euros (13.0), and net cash flow from investing activities totalled -247.3 million euros (142.8).
• Unit cost at constant currency excluding fuel (CASK excl. fuel) increased by 2.0% year-on-year.
• Unit revenue at constant currency (RASK) decreased by 1.9% year-on-year.
• Ancillary and retail revenue per passenger grew by 17% year-on-year to 11.87 euros.
• Earnings per share were -0.15 euros (-0.09).
• Outlook unchanged: In spite of the demand outlook for passenger and cargo traffic in Finnair’s main markets involving renewed uncertainty, Finnair estimates that, in 2016, its capacity and revenue will grow. The lower price of jet fuel supports Finnair’s financial performance in 2016.

On 1 January 2016, Finnair revised its calculation methods for unit revenue (RASK) and unit cost (CASK) to correspond with changes in the group’s structure. The changes are described in more detail in Note 16 "Restatement of operating income and key ratios” and Note 18 "Calculation of key ratios”. The comparison figures have been adjusted accordingly.

CEO Pekka Vauramo:

We achieved a substantial improvement in our result for the first quarter, which is typically the weakest season of the year. While the result still shows a loss, the past quarter was the sixth consecutive quarter in which we achieved a year-on-year improvement in performance. Our comparable operating result was -15.3 million euros, which represents an improvement of a good 13 million euros compared to the previous year.

One positive aspect of the result was that ticket revenue relative to available seat kilometres held up well in spite of a significant increase in supply. Ancillary and retail revenue continued to see strong growth and totalled approximately 30 million euros in the first quarter. Per passenger, ancillary and retail revenue grew by 17%, amounting to 11.87 euros.

At the same time, the situation in the cargo market remained difficult due to overcapacity, with revenues declining in spite of increased volume. The negative impact of the Chinese New Year on cargo demand was also exceptionally protracted this year.

We had three new A350 aircraft in operation for practically the entire first quarter. While their roll-out has involved some of the typical growing pains, our overall experiences of the new aircraft type are unreservedly positive. We have seen a substantial improvement in profitability on the routes we have operated with the new aircraft.

The market price of jet fuel was very low during the period under review. Nevertheless, its impact is not yet fully reflected in our result due to our hedging. For this reason, our fuel costs will decline further in spite of increasing traffic volume, which will support our profit during the remainder of the year.

In March, we revised our organisational structure to better support our growth strategy. We also continued to focus on our core business of air traffic and revised the reporting of our financial performance indicators accordingly.

Our long-haul fleet renewal program reaches its peak this year. We already have five new A350 aircraft in operation, and two more will be delivered during the summer season. We have financed our latest aircraft deliveries on favourable terms, and we have the flexibility required to finance investments using cash funds, with our liquid funds amounting to more than 730 million euros at the end of the quarter.

Outlook

Outlook published on 10 February 2016

The demand outlook for passenger and cargo traffic in Finnair’s main markets involves renewed uncertainty. Finnair estimates that, in 2016, its capacity measured in available seat kilometres will grow by approximately 8 per cent and that its revenue will grow at a slightly slower rate. The lower price of jet fuel supports Finnair’s financial performance in 2016. Finnair will issue a forecast for the development of its full-year operational result in conjunction with its interim report for January–June.

Outlook on 12 May 2016 (unchanged)

The demand outlook for passenger and cargo traffic in Finnair’s main markets involves renewed uncertainty. Finnair estimates that, in 2016, its capacity measured in available seat kilometres will grow by approximately 8 per cent and that its revenue will grow at a slightly slower rate. The lower price of jet fuel supports Finnair’s financial performance in 2016. Finnair will issue a forecast for the development of its full-year comparable operating result in conjunction with its interim report for January–June.

Financial reporting and Capital Markets Day

The publication dates for Finnair’s interim reports in 2016 are as follows:

Interim report 1 January – 30 June 2016: 17 August 2016
Interim report 1 January – 30 September 2016: 26 October 2016
Financial Statements Bulletin 1 January – 31 December 2016: 15 February 2017

Finnair will also arrange a Capital Markets Day in Vantaa on 25 May 2016.

FINNAIR PLC

Board of Directors

Briefings

Finnair will hold a press conference on 12 May 2016 at 11:00 a.m. and an analyst briefing at 12:30 p.m. at its office at Tietotie 9. An English-language telephone conference and webcast will begin at 2:30 p.m. Finnish time. The conference may be attended by dialling your local access number +358 9 2319 3041 and using the PIN code 2419797#. To join the live webcast, please register at: https://engage.vevent.com/rt/finnair~20160512

Distribution:
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Finnair is a network airline specialising in passenger and cargo traffic between Asia and Europe. Helsinki’s geographical location gives Finnair a competitive advantage, since the fastest connections between many European destinations and Asian megacities fly over Finland. Finnair’s vision is to offer its passengers a unique Nordic experience, and its mission is to offer the smoothest, fastest connections in the northern hemisphere via Helsinki and the best network to the world from its home markets. Finnair is the only Nordic carrier with a 4-star Skytrax ranking and a member of the one world alliance. In 2015, Finnair’s revenues amounted to EUR 2,255 million and it had a personnel of 4,800 at the year-end. Finnair Plc’s shares are quoted on Nasdaq Helsinki.

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