1

2

15.2.2019

Topi Manner

A profitable fourth quarter in a challenging environment

• 3.2 million passengers carried

• RPK up by 4.4 % and ASK up by 9.0%

• We added capacity especially to European

destinations, also to Lapland

• More flights to Japan, China and United States

• 101 weekly flights to Asia

• Now twelve A350 aircraft3

Q4 2018: we continued to grow

Passengers

4

Growth continued in Q4 – challenging market conditions reflected in our result

Revenue Comparable

operating result

9.2 M€22.9 M€

3.2 mill+6.7%

683 M€+5.8%

NPS

46+1

NPS = Net Promoter Score

Comparable operating result, 12 months rolling

5

Comparable operating result close to last year’s level

-50

50

100

200

0

150

-48

Q2

2016

Q3

2014

169

Q1

2015

183

Q4

2018

Q4

2014

Q4

2017

Q4

2016

Q4

2015

Q2

2015

Q3

2015

Q1

2016

Q3

2016

Q1

2017

194

-24

Q2

2017

Q3

2017

Q1

2018

Q2

2018

Q3

2018

55

-31-36

2437

53

183

14

61

96

149

170

54

% of revenue

M€

-2.1 -1.6 -1.4 -1.1 0.6 1.1 1.6 2.3 2.3 2.4 2.6 4.0 6.0 6.6 6.9 7.1 6.5 6.0

Revenue, M€

• Asia +5.8%

• North-Atlantic +7.2%

• Europe +3.6%

• Domestic -0.2%

• Unallocated +60.4%

Passenger Load Factor, %

6

• Asia -3.5%-p

• North-Atlantic -0.3%-p

• Europe -3.6%-p

• Domestic -3.1%-p

• Total -3.4%-p

Capacity (ASK), Mill. km

• Asia +2.3%

• North-Atlantic +5.5%

• Europe +19.3%

• Domestic +12.5%

Asia North-

Atlantic

Europe Domestic

5 039

722

3 385

461

5 156

762

4 036

518

200

150

0

50

250

100

300

North-

Atlantic

51

263

295

Asia Europe Domestic Un-

allocated

25

279

36 39

272

51

16

Q4 2017

Q4 2018

Revenue increased in the main market areas

8279 79

67

8079 7976

64

77

EuropeAsia North-

Atlantic

Domestic Total

2018 was a year of growth and transformation

• The year begun in a favorable environment but got

more challenging towards the end of the year

• We continued to grow and invest in the future

• New passenger record 13.3 million

• The COOL Nordic Cargo Hub

• Wi-Fi connection on European flights

• Five star APEX rating

• New destinations Nanjing, Lisbon, Stuttgart and

Lyon

7

Exploiting new technologies

• 25 % ticket sales and over 50% of our

ancillaries are bought through Finnair’s

digital channels

• Fast Wi-Fi on our Narrow-body fleet

• iPhones and new applications for personnel

• Exploiting artificial intelligence

8

Competition increased in 2018

9

+ Asian traffic remained robust

+ Finnair's new COOL terminal strengthened our

cargo operations

+ Rising fuel price pressure eased during Q4

- Competition tightened especially on European routes

- Travel services competition increased towards end of

the year

- Cancellations due to weather and shortage of spare

narrow-body engines

- Currency movements unfavorable

-36

24

55

170 169

2014 2015 2016 2017 2018

Revenue Passengers

10

Full year 2018: Development of key indicators reflect growth

2 284 2 255 2 317

2 568

2 835

7.7 % 10.2 % 11.7 %

17.0 % 16.8 %

2014 2015 2016 2017 2018

Revenue, M€

Comparable EBITDAR, % of revenue

9 63010 294

10 867

11 905

13 281

2014 2015 2016 2017 2018

Comparable EBIT

1,1 % 2,4 %-1,6 % 6,0 %

Comparable EBIT, % of revenue

79,8%

Passenger load factor (PLF), %

83,3%

6,6 %

81,8%80,2% 80,4%

M€ M€

Comparable EBIT, M€ Passengers, 1 000

Financial target: Comparable EBITDAR of

revenue, 17 %

Financial target: Comparable EBIT of

revenue, 6 %

Capacity growth continues - new destinations and

frequencies in 2019

• Hannover, Bologna, Bordeaux, Porto

• Los Angeles, Sapporo, Punta Cana

• Hong Kong and Osaka

Economic, social and environmental responsibility is

in our focus in all operational development

We utilize the potential of technology to improve

productivity and customer experience

Long-term investment to develop customer

experience and people experience continues11

Aiming for sustainable profitable growth

Outlook and dividend proposal

Global airline traffic is expected to continue growing in 2019.

Finnair expects increased competition as capacity is added,

particularly on routes linking Europe with Asia as well as in

short-haul traffic. The slowdown in the economy of Finnair´s key

markets and the continued uncertainties surrounding global

trade, including from Brexit, could impact the demand for air

travel and cargo.

Finnair plans to increase its capacity by approximately 10 per

cent in 2019, down from its 14.8 per cent capacity growth in

2018. This growth is mainly focused on the Asian market.

Revenue is expected to grow at a somewhat slower pace than

capacity in 2019.

In line with its disclosure policy, Finnair will issue guidance on

its full-year comparable operating result as part of its half-year

report in July.

The Board of Directors proposes to the Annual General Meeting

that a dividend of 0.274 euros per share be distributed for

2018.

12

14

FinancePekka Vähähyyppä

Fuel cost the most significant driver for EBIT decline compared to Q4/2017

15

1) Avg. fare = Passenger revenue per revenue passengers.

• Operating expenses excluding fuel +5.2% (ASKs +9.0%)

• Fuel costs including hedging results and emissions trading cost

+18.9%

• Unit cost (CASK) -0.7%, CASK ex fuel at constant currency

-4.3%

Fuel

-10.2

-16.1

Other exp.

-9.3

9.2

Aircraft

10.7

Passenger 39.4

Staff Other (NET) Q4 EBIT

Ancillary& retail 1.9

Cargo 2.8

Travel services -6.4

-3.5

Revenue Traffic

charges &

Ground

handling

-23.1

Q4 PY EBIT

22.9

37.7

-13.7

28,969

Q4 PY

31,089

Q4

+7.3%

10,4739,607

Q4 PY Q4

+9.0%

Q4

2,956

Q4 PY

3,155

+6.7%

166

EUR /

PAX

Q4 PY

168

EUR /

PAX

Q4

+1.2%

Q4 PY

80.3

76.9

Q4

-3.4pp

12.6

EUR /

PAX

Q4 PY

12.4

EUR /

PAX

Q4

-1.4%

6.72 6.52

Q4 PY Q4

-2.9%

Q4 PY

40.9

KG

44.5

KG

Q4

+8.8%

1.40

EUR /

KG

Q4 PY

1.35

EUR /

KG

Q4

-3.6%

RASK FLIGHTS ASK, mill

PAX, 1000 Avg. fare1 PLF, %

Ancillary REV Cargo, mill Cargo yield

Fuel costs Q4/17 vs. Q4/18

Q4/17 hedging gain 6.9 M€

Q4/18 hedging gain 27.7 M€

Fuel hedges 31 December 2018

16

Higher price of jet fuel and Finnair’s growing volume increased fuel costs in Q4

2017 Ground

handling

Passenger 223.5

Ancillary & retail 16.2

Traffic

charges

Fuel Tour

operator

-45.9

-12.9

Other

exp.

-108.9

-34.4

Staff Leases&

depreciation

-10.2

2018

-10.1

-4.7

-40.2

Revenue

Travel services 16.9

Other

(NET)

Cargo 9.5

170.4

266.2

169.4

-1.0

114,718

2017

125,848

2018

+9,7%

2017

36,922

42,386

2018

+14.8%

2018

11,905 13,281

2017

+11.6%

169

EUR /

PAX

2017

170

EUR /

PAX

2018

-0.5%

83.3

2017

81.8

2018

-1.5pp

12.1

EUR /

PAX

2017

12.1

EUR /

PAX

2018

-0.3%

6.96

2017

6.69

2018

-3.9%

2017

157.0

KG

158.2

KG

2018

+0.7%

2017

1.26

EUR /

KG

1.31

EUR /

KG

2018

+4.1%

2,475

2017

2,739

2018

+10.7%

2,835

2017

2,568

2018

10.4%

Full year EBIT -1 mEUR below previous year

17

RASK FLIGHTS ASK, mill

PAX, 1000 Avg. fare1 PLF, %

Ancillary REV Cargo, mill Cargo yield

REVENUE COSTS

1) Avg. fare = Passenger revenue per revenue passengers

18

Adjusted net debt

0

-1,000

-1,500

-2,000

-500

7x aircraft

leases +

currency

hedges

Adjusted

net debt

Adjusted

interest-bearing

liabilities

-1,085 1,073

-687

Cash

-675

1) HFS = Held-for-Sale. 2) I-B = Interest-bearing

Healthy balance sheet supports future investments

• Equity ratio 34.7%

• Adjusted gearing 67.2%

450

983

1 022

167

435

1 271

1 119

31.12.2017

15

170

2 947

385

1 336

30.9.2018

11

171

1 073

327

1 376

30.12.2018

669

1710

699664

112

31.12.2018

678

466

100104

1 154

445

719

656

2 947

1 016

30.9.2018

2 8873 076 3 076

2 887

31.12.2017

Other fixed assets

Liabilities HFS

Assets HFS

Cash

Fleet

Other assets

I-B debt

Tickets

Other liabilities

Provisions

Equity

One new A350 aircraft and one A350 SLB main drivers for cash flow changes

19

-15.1

Working

capital

-45.6

Other

-161.4

Investments

Disposals

-2.3-14.9

-15.8-3.7

Purchase

of own

shares

655.8

Liquid

funds

Q3

Hybrid

bond

interests

114.2

Liquid

funds

Q4

Loan

payments

Other

98.2

702.2

EBITDA

Operating+37.5mEUR

Change in cash flows-46.4 M€

Investing-49.5mEUR

Financing-34.4mEUR

475

198

656

417

181

702

505

30 Sep 2018

417

31 Dec 2018

1,1191,073

Cash funds-45.6 M€

Commercial paper, deposits and funds > 3 months

Cash and bank deposits

Commercial paper, deposits and funds < 3 months

Liquid funds in cash flow

IFRS 16 Leases standard replaces IAS 17

20

• Finnair will adopt the IFRS 16 -standard from 2019 onwards, and plans to apply the full retrospective method

→ significant impacts on Finnair financial statements and key ratios.

• The present value of the future operating lease payments for aircraft and other lease agreements will be recognized as

right-of-use -assets and interest-bearing liabilities in the balance sheet.* Lease cost is divided into depreciation of the

right-of-use -asset (operating result) and interest cost for the liability (finance net).

• Significant impacts on following key ratios: operating result, EBITDA, cash flow from operating activities, cash flow from

financing activities, interest-bearing net debt, gearing and equity ratio.

INCOME STATEMENT

20

Lease expenseDepreciation of

ALL leases

Interest

expense of ALL

leases

EBIT

PBT

CURRENT NEW

Finance lease

depreciation

Finance lease

Interest expense

BALANCE SHEET

CURRENT NEW

Finance Lease

Asset

Finance Lease

Liability

OFF-Balance sheet

Operating lease

commitment

“Right-to-use”

Lease Asset

Lease Liability

for ALL leases

ASSETS

DEBT

OFF BS

*Currently, future lease

payments are presented in

the notes as operating lease

commitments at their

nominal value. Based on

Finnair's preliminary

evaluation, service contracts

that relate to the usage of

airports and terminals (HEL

hub) do not qualify as lease

arrangements for IFRS 16

purposes.

IFRS 16 implementation and its estimated impacts

in mill. EUR 31 Dec 2018

ASSETS

Intangible assets 20.4

Tangible assets 1 526.6

Investments in associates and joint ventures 3.3

Loan and other receivables 4.3

Assets total 2 947.3

in mill. EUR 31 Dec 2018

EQUITY AND LIABILITIES

Equity attributable to owners of the parent

Share capital 75.4

Other equity 946.2

Equity total 1 021.7

Deferred tax liabilities 73.5

Interest-bearing liabilities 561.0

Pension obligations 17.0

Provisions 91.3

Other liabilities 4.8

Total liabilities 1 925.3

+€1.0 bn(due to the

recognition of

right-of-use

asset)

-€0.1 bn(Due to

restatement of

comparative

information)

+€1.1 bn(due to the

recognition of

lease

liabilities)

• Equity ratio is expected to decrease by more than -10%-points

• Gearing to increase by more than 100 percentage points, to

approximately 70 per cent, which corresponds with the Adjusted

Gearing used earlier

Balance sheet

Key figures

+€1.0 bn

-€0.1 bn

+€1.1 bn

Cashflow statement

• Repayments of lease liabilities will be moved from

operating cash flow to financing cash flow in

accordance with IFRS 16.

• Operating cash flow in 2018 will increase by

approximately 30%, with a corresponding negative

adjustment in financing cash flow.

IFRS 16 implementation and estimated impacts

Year 1 Year 2 Year 3 Year 4 Year 5

Interest cost associated with the liability Depreciation of the right-to-use-asset

Periodicity of interest expense and right-to-use-asset

in mill. EUR 2018 Direction

Operating expenses

Other rents -154.9

Comparable EBITDAR 475.4

Lease payments for aircraft -155.0

Depreciation and impairment -151.1

Comparable operating result 169.4

Operating result 207.5

Financial expenses -16.0

Result for the period 150.7

Income statement

THANK

YOU

Contact us:

Finnair IR / financial

communications

mari.reponen@finnair.com

kasper.joukama@finnair.com

24

Appendix

26

Finnair’s earnings are sensitive to changes in fuel price

Impact on comparable operating profit rolling 12

monthsJet-fuel* price development since 2015

Comp.

EBIT

EUR 169

Million

Jet-fuel price

change

10 % without hedging

EUR 59 million

taking hedging

into account

EUR 25 million

*Jet-fuel Price/ Weekly Averages, Platts Jet Fuel CIF NWE

USD/tonne

284 $

544 $

Fuel sensitivities rolling 12 months from date of financial statements

Hedging ratio for the next 12 months is 66%

100

200

300

400

500

600

700

800

900

2015 2016 2017 2018

789 $

Revenue Comparable operating result

29

Revenue and comparable operating result development

0

300

100

200

500

700

400

600

800

900

Q1

683735

Q2

715

570

Q3

521 536 554635

544 570633 622 641

801

568645

Q4

2015

2016

2017

2018

-40

80

60

-20

0

20

40

100

120

119

Q1

6664

2

-28

Q4

-15 -94

-133

38

Q3

48

Q2

108

1

239

2018

2015

2016

2017

Income statement

in mill. EUR Q4 2018 Q4 2017 Change % 2018 2017 Change %

Revenue 683.1 645.3 5.8 2 834.6 2 568.4 10.4

Other operating income 18.6 19.8 -5.8 73.7 77.0 -4.2

Operating expenses

Staff costs -102.3 -113.0 -9.5 -433.4 -423.3 2.4

Fuel costs -145.4 -122.3 18.9 -581.0 -472.2 23.1

Other rents -40.9 -38.4 6.5 -154.9 -157.9 -1.9

Aircraft materials and overhaul -47.1 -40.7 15.5 -169.1 -165.7 2.0

Traffic charges -74.4 -67.0 11.1 -300.8 -266.5 12.9

Ground handling and catering expenses -65.4 -62.7 4.4 -256.9 -252.2 1.9

Expenses for tour operations -27.8 -27.7 0.4 -113.4 -100.5 12.9

Sales and marketing expenses -25.2 -25.5 -1.0 -92.4 -85.8 7.7

Other expenses -83.1 -73.9 12.6 -330.9 -285.1 16.1

Comparable EBITDAR 90.0 94.0 -4.2 475.4 436.2 9.0

Lease payments for aircraft -38.5 -36.1 6.5 -155.0 -136.6 13.4

Depreciation and impairment -42.4 -34.9 21.2 -151.1 -129.2 16.9

Comparable operating result 9.2 22.9 -59.9 169.4 170.4 -0.6

30

Hedging currencies and sensitivities 31 December 2018

Fuel sensitivities10% change

without hedging

10% change. taking

hedging into account

Hedging ratio

(rolling 12 months from date of financial statements) H1/2019 H2/2019

Fuel EUR 59 million EUR 25 million 75% 58%

Currency distribution

%

10-12

2018

10-12

20172018 2017

Currency sensitivities

USD and JPY

(rolling 12 months from date of financial statements for

operational cash flows)

Hedging ratio for

operational cash flows

(rolling next 12

months)

Sales currencies 10% change without hedging10% change. taking

hedging into account

EUR 56 59 55 55 - -

USD*4 3 4 4

see below see below see below

JPY10 7 10 10

EUR 32m EUR 15m 64%

CNY 6 6 7 7 - -

KRW3 3 3 3

- -

SEK4 4 3 4

- -

Other18 18 17 17

- -

Purchase currencies

EUR55 58 56 57

- -

USD*38 34 37 35

EUR 85m EUR 33m 65%

Other7 8 7 7

31 * Hedging ratio for USD-basket, which consists of USD- and HKD net cash flows. The sensitivity analysis assumes that the Hong Kong dollar continues to correlate

strongly with the US dollar.

Share of operating costs %, 692,5M€

32

Fuel the single largest cost item in Q4/2018

21 %

15 %

12 %12 %

11 %

9 %

7 %

6 %

4 % 3 %Fuel costs

Staff costs

Other expenses

Leasing, depreciation and impairment

Traffic charges

Ground handling and catering expenses

Aircraft materials and overhaul

Other rents

Expenses for tour operations

Sales and marketing expenses

Operating costs Q4/2018 Q4/2017 Change %

Staff costs -102.3 -113.0 -9.5

Fuel costs -145.4 -122.3 18.9

Other rents -40.9 -38.4 6.5

Aircraft materials and overhaul -47.1 -40.7 15.5

Traffic charges -74.4 -67.0 11.1

Ground handling and catering expenses -65.4 -62.7 4.4

Expenses for tour operations -27.8 -27.7 0.4

Sales and marketing expenses -25.2 -25.5 -1.0

Other expenses -83.1 -73.9 12.6

Lease payments for aircraft -38.5 -36.1 6.5

Depreciation and impairment -42.4 -34.9 21.2