Finnair Group Financial year

April 1 - December 31, 2000

FROM CRISIS TO GROWTH

1999: The moment of truth

2000: Adaptation and investment for the future

2001: Introduction of new structures

2002: Accelerating growth

We doubled our results

1. Profitability: Profit before extraordinary items rose 103 % (125,1 MEUR)

2. Yield: Yield continued up (8,1% per RPK), successful elimination of loss making routes

3. Costs: Operating costs (excl. fuel) decreased 1,1%4. Efficiency: World´s most efficient use of B757 fleet5. Staff: New incentive schemes, 3,3 % productivity increase,

4,8 % less staff6. Transparency: Quarterly reporting since Q1/1999, new

Group structure January 1, 2001

Focus on superior quality

• 1. Quality: Most punctual (AEA) and best customer service (SoFie/IATA)

• 2. Service: Best service brand in Finland (Markkinointi & Mainonta) and once again best ”Cellar in the sky” (Business Traveller)

• 3. Focus on strong brands– New Finnair corporate image– Finnmatkat sold, emphasis put on developing

Suntours

Q1+Q2+Q32000

Q1+Q2+Q31999

Turnover MEUR 1259.3 1194.1

EBIT MEUR 122.0 61.1- of turnover % 9.7 5.1

EBIT excl. book gains MEUR 62.4 29.6- of turnover % 5.0 2.5

Profit before extraordinary items and taxes MEUR 125.1 61.6- of turnover % 9.9 5.2

EPS EUR 1.05 0.47Equity/share EUR 7.60 6.57

ROCE % 15.2 7.3Net debt MEUR 74 75Equity ratio % 42.6 41.5Gearing % 11.5 13.5

Finnair Group key figures

Improved transparency

• The financial year will match the calendar year from 2001

• Key economical figures for 2000 are shown as pro forma

• From the beginning of 2001 the financial reporting will be based on the new Group structure with six business areas in order to promote clarity and improve transparency

Steady turnover growthMEUR

0

200

400

600

800

1000

1200

1400

1600

1800

1996/ 97 1997/ 98 1998/ 99 1999/ 00 2000

EBIT over EUR 100 million

0

20

40

60

80

100

120

1996/97 1997/98 1998/99 1999/00 2000

0

2

4

6

8

10

12

14MEUR %EBIT % of turnover

Profit doubledProfit before extraordinary items and taxes

MEUR

0

20

40

60

80

100

120

140

1996/ 97 1997/ 98 1998/ 99 1999/ 00 2000

Strong cash flow from operations

0

50

100

150

200

250

1996/97 1997/98 1998/99 1999/00 2000

0

2

4

6

8

10

12

14

16

MEUR

% of turnover%

Return on Capital Employed%

0

2

4

6

8

10

12

14

16

18

1996/97 1997/98 1998/99 1999/00 2000

Year 2000 WACC 8 %

Return on Equity%

0

2

4

6

8

10

12

14

16

18

1996/97 1997/98 1998/99 1999/00 2000

Improved results with less personnelGroup personnel on average

7 000

8 000

9 000

10 000

11 000

12 000

1996/97 1997/98 1998/99 1999/00 9 mths2000

200

220

240

260

280

300

1996 1997 1998 1999 2000

Productivity improvement

ATK (1000) / person

Investing in first class equipment

MEUR

0

50

100

150

200

250

300

1996/ 97 1997/ 98 1998/ 99 1999/ 00 2000

Other investmentsBuildingsFlight equipment

Net debt decreasedMEUR

0

50

100

150

200

250

300

350

1996/ 97 1997/ 98 1998/ 99 1999/ 00 2000

I nterest bearing debt

Liquid funds

Finnair has a strong balance sheetEquity ratio

%

35

40

45

50

1996/97 1997/98 1998/99 1999/00 2000

Improved Gearing%

-10

-5

0

5

10

15

20

25

1996/97 1997/98 1998/99 1999/00 2000

Cash earnings per share

0

0,5

1

1,5

2

2,5

3

3,5

1996/97 1997/98 1998/99 1999/00 2000

EUR

Finnair’s dividend policy“It is Finnair’s dividend policy to pay out at least a third of the earnings per share as dividend during an economic cycle. We try to take into account the company’s earnings trend and outlook, financial situation and capital needs for any given period.”

• For the financial year 2000 a dividend of EUR 0.40 is proposed, which amounts to 38 per cent of earnings per share

• Effective dividend yield 8.7% (spot price EUR 4.60 March 7, 2001)

0

10

20

30

40

1996/ 97 1997/ 98 1998/ 99 1999/ 00 2000

0

20

40

60

80

Competitive pay out -ratioAnnual dividend

MEUR % of EPS

%

*

* Dividend proposal by the Board of Directors to the AGM is EUR 0.40/share

0

2

4

6

8

10

12

1996/ 97 1997/ 98 1998/ 99 1999/ 00 2000

Equity/ share Share price/ high Share price/ low

EURDeep discount in Price to Book

Final quarter of the fiscal year1.10.-31.12.2000

• Strong development in yield continued – Revenue from flight operations/RTK + 5.8%– Revenue from flight operations/RPK + 7.4%

• EBIT 28.6 MEUR (31.6)• Capital gains 25.4 MEUR (22.8)• Fuel costs up by 66.4%• Because of the financial year change, final quarter EBIT

includes extraordinary items as:– provisions for profit bonus and incentive schemes– provisions for aircraft maintenance costs– revenue from unused flight documents

Net impact from these and other items totals -12 MEUR

-10

-5

0

5

10

15

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

YieldUnit costsUnit costs excl. fuelUnit costs excl. exceptional itemsUnit costs excl. exceptional items and fuel

Yield and Unit cost developmentChange to previous year

1999 2000

%

-30

-20

-10

0

10

20

30

40

50

60

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Operating EBIT Capital gainsMEUR

1998 1999

EBIT per Quarter

2000

-40

-30

-20

-10

0

10

20

30

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

MEUR

1998 1999

EBIT per QuarterChange to previous year, excluding capital gains

2000

Change excl. exceptional items due to change of fiscal year. These items include provisions for profit bonus and incentive schemes and for aircraft maintenance costs, revenue from unused flight tickets

*

*

Finnair Group New management structure 1.1.2001

C argo L e isu reT raffic

S ch ed u ledP assen g er

T raffic

A viationS ervices

T ravelS ervices

S u pp o rtS ervices

G ro up S tra tegyreso u rces

• Business divisions consists of more independent business units and subsidiaries in order to improve transparency and allow for more flexible and efficient operations in a shifting competitive environment• Each business unti will have its own business strategy, management team and its own remuneration principles• Responsibility for capital employed and for the return on it

Profitable growth in 2001

• Growth with existing resources• Benefit from more integrated alliance co-

operation• Efficiency with the new management structure• Agreements with all labour unions• Improved working atmosphere and internal

communication• Modernisation of fleet with Airbus A320 family • eFinnair

Online -sales growth scenario

• Year 2000 total online -sales approx. 60.000 passengers• Year 2001 forecasts between 175.000 – 300.000

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

2000 2001

Positiv forecast 2001

Realistic forecast 2001

Modest forecast 2001

Confident future

• Underlying profitability expected to improve further

• Capacity growth 1-2 % (ATKs)• Investments approx. 275 MEUR, fleet renewal

continues• New growth from Asia

– Fourth MD-11 aircraft on scheduled passenger traffic 2002 (Hongkong new destination)

– Substituted by two leased B757 aircraft on leisure traffic

Challenges this year

• Consolidation of Group structure • Capacity utilization still low • Fuel prices• Aero and domestic feeder traffic• Preparedness for accelerating growth 2002

Appendices

Development index of jet fuel in 2000

80

100

120

140

160

180

200

I II III IV V VI VII VIII IX X XI XII

Index 100 = 1999

Changes in Passenger Traffic & CapacityTOTAL TRAFFIC

-15

-10

-5

0

5

10

15

20

25

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

feb

apr

jun

aug

oct

dec

%

Traffic - Revenue Passenger-Km

Capacity - Available Seat-Km

19991998 2000

Number of passengers

1000 passengers

0

1000

2000

3000

4000

5000

6000

7000

8000

1996 1997 1998 1999 2000International traffic

Domestic traffic

Distribution of scheduled traffic revenues2000

North America

10 %Europe55 %

Domestic21 %

Asia14 %

Distribution of passenger sales in scheduled traffic2000

North America5 %

Europe30 %

Domestic58 %

Asia7 %

Revenue tonne kilometresMill. tnkm

0

200

400

600

800

1000

1200

1400

1600

1996 1997 1998 1999 2000

International trafficDomestic traffic

Strong cargo volume growth1000 kg

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

1996 1997 1998 1999 2000

International traffic

Domestic traffic

Distribution of cargo kilos2000

Europe40 %

North America31 %

Asia20 %

Domestic6 %

Leisure traffic3 %

Steady increase in technical sales

MEUR

0

10

20

30

40

50

60

70

1996/97 1997/98 1998/99 1999/00 2000

Excludes revenue from the maintenance of Finnair operated aircraft