Q2 2020:COVID-19 almost grounded Finnair traffic – ramp-up has begun24 July 2020Topi Manner, Finnair

Q2 started with a drastic ramp-down of capacity

• Finnair operated c. 3% of the capacity compared to previous year• Critical flight connections for Finland were

maintained• Cargo flights supported supply security

• Only few passenger flights to Asia and North America during Q2

• Traffic program reflected travel restrictions

3

MayJan Feb Mar 16.3. Apr Jun

16 March: Finnish government announces measures, setting in motion preparations to close

the country’s borders.

ASK vs. LY*:2020/Apr: -97.0%2020/May: -97.7%2020/Jun: -96.9%

* As per Finnair Traffic Performance publications, for April, May and June respectively.

Available seat kilometres

Cargo generated the majority of Finnair’s Q2 revenue

• More than 70% of Q2's revenue was generated by cargo. Demand particularly strong in May

• 602 one-way cargo-only flights mainly to Asia

• The cargo included products needed to treat the pandemic, food and other cargo

• Freight demand also supports the launch of passenger flights, especially to Asia

4

Heavy losses in line with expectations

5

NPS = Net Promoter Score*Finnair carried in total of 0.1 million passengers in Q2/2020 and 3.9 million passenger in Q2/2019.

Capacity

-97.2%Revenue

-91.3%

Comparable operating result

-174.3 M€(47.2 M€)

NPS

40

PLF

-49.4%-points

Operating cost

-66.4%Passenger volume

-97.5%*

Operating cost(Excl. fuel)

-61.6%(In fuel combined effect of price

paid, currency and hedges totaled 23 million euros)

Paid refunds already more than 270M€

• More than 650,000 passengers have received their refunds due to cancelled flights

• Finnair canceled flights until 31 March 2021; customers received information about cancellations by 30 June

• Approx. 6,500 new applications per week

• Payments to customers more than 270 M€, c. 100 M€ backlog

• Additional resources and robotics to speed up the processing

6

Fuel costs decreased with volume

7

• Due to COVID-19, the volume of fuel consumed was lower than expected, thus, hedges put in place were partially ineffective

• Fuel price was lower than expected• As a result, volume related decline was

partially netted by fuel price (inclusive of currency and hedging)

Fuel costs Q2/20 vs. Q2/19

~23 M€

Q2 2020CurrencyQ2 2019 Volume Price Hedgingdeviation

180.6

-170.1-16.1

1.5

37.4 33.2

-147.3M€

Fuel hedges impacted Q2 result

• Finnair utilises hedge accounting according to IFRS to mitigate result volatility caused by derivatives

• Due to COVID-19, operational level was been adjusted and, thus, underlying currency and fuel price exposure was non-existent

• As the underlying risk did not exist, Finnair unwound the excess hedges, in line with IFRS. The market value of those derivatives was reclassified to financing expenses from other comprehensive income

• This increased net financing expenses (below comparable operating result) by 29 million euros in Q2

8

Fuel hedging policy aligning with normalised traffic• As the overhedged position has been unwound,

no significant net financial expense impact is expected in Q3

• In Q3, the ramp-up will also begin to normalisethe fuel consumption

• As a result, Finnair will gradually restore its hedging position • Timeframe dependent on capacity and fuel

price development

9

Successful rights issue restored equity to pre-pandemic level• Successfully executed, oversubscribed rights

issue of 500 million euros• Represents the first EMEA airline rights issue

since the start of the COVID-19 pandemic • The largest Finnish rights issue since 2015

• Equity ratio improved significantly

• Our strong ownership structure remained essentially unchanged in the rights issue

• Warm thanks to our old and new shareholders, who participated in the rights issue!

10

Cash funds at a strong level due to timely and comprehensive financing measures

11

Rights issue

Loan repayments

Other Q2 Cash funds

-315.3

Pension premium

loan

Q1 Cash funds

200.0

Comparable EBITDA

Change in

working capital

832.5

Other operating cash flow

Invest-ments

-89.2

-64.0

380.4

-45.3

10.7 850.6

-59.2

+18.1 • Rights issue and pension premium loan had a significant positive impact on cash funds

• 380M€ rights issue proceeds received in June (remaining 120M€ in July)

• 200M€ pension premium loan tranche withdrawn in June

• 163M€ cash refunds paid to customers in Q2 (total 2020 more than 270M€)

• Change in working capital is mainly related to low capacity and, as a result, paid refunds

Equity ratio, %

The equity ratio on 30 June 2020 was slightly higher than at the end of 2019 despite the declined result for the period and change in the fair value reserve as 395.4 million euros related to rights offering was received by the end of June 2020.

Gearing, %

12

Equity ratio and gearing improved significantly due to rights issue

Gearing rose significantly from year end, as interest-bearing net debt increased, due to withdrawal of pension premium loan and utilisation of revolving credit facility. Then again rights issue decreased gearing compared to Q1 level.

2019 Q1 2020

64.3

Q2 2020 Q2 2020 Pro forma*

125.5106.3

84.4

+42.1pp

25.724.9

2019 Q2 2020 Pro forma*

Q1 2020 Q2 2020

19.6

27.9+0.8pp

* Reflects rights issue’s net effect (ca. 503 M€) on share capital.

Cost savings program is proceeding well

• We aim for permanent annual cost savings of 80M€ by 2022 compared to 2019 cost level

• Savings are sought e.g. in real estate costs, aircraft leases, reward structures, sales and distribution costs, IT costs and administrative costs

• First steps have been taken and results are encouraging

13

Traffic recovery started in July

• It is estimated that after 2 - 3 years, traffic returns to the 2019 level

• In July, we have flown c. 25% of normal number of flights• More than 30 destinations• About 80 - 90 flights a day• Long-haul flights launched: Tokyo, Seoul, Hong Kong,

Shanghai, Bangkok

• We update our traffic schedule weekly with demand and travel restrictions

14

Number of routes and frequencies increases towards fall• In August, the number of daily flights increases to c. 120

• More leisure destinations

• Dublin, Edinburgh, Rome and Milan are opened

• In September, the number of daily flights is estimated to be c. 190

• Flexibility for travel day changes in reservations made from Finnair channels from 1 April to 31 August 2020

• Extension of the monitoring period for Finnair Plus levels and point expiry

15

We protect the health of our customers and staff

• Several measures to protect the health of our passengers and workforce

• Enhanced cleaning or aircraft

• Minimizing unnecessary contacts and movement in the cabin, at boarding and during disembarking

• Face masks for customers and staff

16

Outlook and guidance

17

Outlook 24 July 2020In Q3, Finnair gradually increases its capacity and will operate c. 25% of flights in July compared to the same period in 2019. Based on the current assumption, the share of flights operated increases to c. 50% in September. There are uncertainties relating to COVID-19 development and lifting of travel restrictions. As a result, the outlook remains unclear and the company does not provide revenue guidance for Q3. As ramp-up is an investment, and there are costs associated with it, and Finnair will be running with clearly reduced capacity, the comparable operating loss in Q3 will be of a similar magnitude than in Q2. Further, the company reiterates its previous guidance and states that the revenue will decrease significantly in 2020 compared to 2019 and that the comparable operating loss will be significant in the financial year 2020. In addition, Finnair's capacity will decrease significantly this year compared to 2019. Finnair updates its outlook and guidance in connection with the Q3 interim report.

18

19

Appendix

Revenue by product

Turnover declined due to flight cancellations

20

-97.9 %-87.9 %-9.5 %-100.0 %

• Passenger revenue declined significantly due to COVID-19 related cancellations and travel restrictions

• Cargo-only demand boomed in Q2, driven by the exceptional global situation

• Due to COVID-19, Aurinkomatkat cancelled all package tours between 13 March and 30 June

Q2 2019

48

69

45

642

55

14 550

0

Q2 2020

789-91.3%

Passenger revenue

Travel services

Ancillary and retail revenueCargo

Passenger revenue Q2/19 vs Q2/20 Other revenue Q2/19 vs Q2/20

21

Passenger revenue declined worldwide in all traffic categories. Cargo outperformed other revenue streams

Travel services

-39.8

Cargo

45.3

Q2 2019

47.6

54.7

Ancillary

5.5

0.049.5

Q2 2020

-5.2-39.8

147.6

-47.655.0

-62.8%

-39.3EuropeQ2 2019 AtlanticAsia Unallo-

catedDomestic Q2 2020

-3.6

641.5

-275.6 -50.8

-258.713.7

-97.9%

AncillaryCargoTravel services

• Cargo-only demand boomed in Q2, driven by the exceptional global situation. • On similar capacity June passenger revenue nearly equalled April and May combined, as we

actively follow return of travel demand and its ability to support our ramp-up plan.

Capacity was adjusted due to COVID-19 related travel restrictions and demand decline

22

Passenger revenue Q2/2019 vs Q2/2020, M€

• Passenger revenue declined significantly due to cancellations and travel restrictions

Q2 2019 ASK FX Yield, mix, other

213.5

-227.1PLF (load) Q2 2020

-615.2

641.5

0.9

13.7

-627.9

Q2 2020

164EUR/ PAX

Q2 2019

140EUR/PAX

-14.9%

Avg. fare1

Q2 2019 Q2 2020

82.5

33.1

-49.4pp

PLF, %

12,307

Q2 2019 Q2 2020345

-97.2%

ASK, mill

1) Avg. fare = Passenger revenue per revenue passengers

Costs did not decline in line with revenue

23

Comparable EBIT Q2/19 vs Q2/20

OPEX = operating expenses.

Depreciation and

impairment

Property, IT and other

expenses

Other operating income

4.5

Fuel costs

Capacity rents

Aircraft materials

and overhaul

Sales, marketing

and distribution

costs

Staff and other crew

related costs

Passenger and

handling services

Revenue

Travel services -47.6Cargo -5.2

50.2

Ancillary sales -39.8

88.8

Traffic charges

147.3

-2.3Q2

2020

Passenger revenue -627.9

Q2 2019

47.2

-720.5

15.1 31.275.5

95.1-6.4 -174.3

-221.5M€

• OPEX 253.8M€ in total• Capacity decline -97.2%• Revenue decline -91.3%• Operating costs -66.4%• OPEX excluding fuel -61.6%

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COVID-19 impacted also unit revenue and cost

CASK development, € centsRASK development, € cents

• Unit cost (CASK) increased from 6.03 in Q2 2019 to 70.50 in Q2/2020.

• Unit revenue (RASK) increased from 6.41 in Q2 2019 to 19.92 in Q2/2020 due to Cargo only flights, which generate no available seat kilometres.

0

1

2

3

6

4

5

20

Q1 2018

6.53

Q1 2020

6.86

Q2 2019

6.266.67

Q2 2018

Q3 2018

Q4 2018

6.96

Q1 2019

Q3 2019

Q4 2019

Q2 2020

5.80

19.92

6.58 6.41 6.69

0

1

71

4

2

3

6

5

6.036.42

1.32

4.88

Q2 2018

Q1 2018

Q3 2018

Q4 2018

1.51

Q1 2019

4.55

Q3 2019

6.75

Q4 2019

6.06

Q1 2020

9.64

1.48

6.27

60.85

6.12 5.936.41 6.42

70.50

4.77

Q2 2019

5.11 4.52

Q2 2020

1.39

4.94

1.36 1.41

5.05

1.36

4.56

1.47

5.26

1.49

FuelCASK excl fuel

Income statementin mill, EUR Q2 2020 Q2 2019 Q1-Q2 2020 Q1-Q2 2019 2019

Revenue 68.6 789.1 629.8 1,457.3 3,097.7Other operating income 10.9 13.1 24.9 27.7 56.4

Operating expensesStaff and other crew related costs -48.1 -136.9 -184.3 -266.6 -534.7Fuel costs -33.2 -180.6 -177.1 -325.8 -687.3Capacity rents -17.8 -32.8 -47.7 -65.0 -130.2Aircraft materials and overhaul -19.5 -50.7 -59.7 -97.0 -201.2Traffic charges -11.8 -87.3 -76.4 -159.4 -331.3Sales, marketing and distribution costs 7.8 -42.3 -22.6 -84.0 -172.1Passenger and handling services -17.7 -112.8 -122.4 -235.5 -476.7Property, IT and other expenses -28.4 -32.9 -62.5 -66.2 -132.4Comparable EBITDA -89.2 125.9 -97.8 185.6 488.3Depreciation and impairment -85.1 -78.7 -167.6 -154.6 -325.4Comparable operating result -174.3 47.2 -265.4 31.0 162.8

Operating result -171.2 47.9 -266.8 30.3 160.0Financial income 15.3 1.5 24.6 2.2 4.8Financial expenses -61.4 -21.2 -150.3 -42.5 -83.6Exchange rate gains and losses 2.1 10.8 -0.8 0.5 12.7Share of results in associates and joint ventures -0.9Result before taxes -215.1 39.0 -393.3 -9.4 93.0Income taxes 43.0 -7.8 78.7 1.9 -18.4Result for the period -172.1 31.2 -314.6 -7.6 74.5

THANK YOU

Contact us:

Finnair IR and financial communicationsInvestor.relations@finnair.com