Finnair Group financial statement release 1 January–31 December 2016

October-December 2016

• Revenue increased by 0.4% year-on-year to 569.9 million euros (567.7)*. Excluding the sold travel agencies, revenue growth was 1.2%
• Available seat kilometres (ASK) grew by 3.5%.
• Comparable operating result was 1.6 million euros (0.8).
• Operating result was 18.2 million euros (85.0). The items affecting comparability were mainly related to foreign exchange gains.
• Comparable EBITDAR was 59.4 million euros (59.5).
• Net cash flow from operating activities totalled 30.5 million euros (7.1), and net cash flow from investing activities amounted to -264.7 million euros (-7.8).**
• Unit revenue (RASK) decreased by 3.0% year-on-year.***
• Unit cost (CASK) decreased by 3.2% and unit cost at constant currency excluding fuel decreased by 1.6% year-on-year.
• Ancillary and retail revenue per passenger grew by 10.3% year-on-year to 12.2 euros.
• Earnings per share were 0.08 euros (0.44).

January-December 2016

• Revenue increased by 2.8% year-on-year to 2,316.8 million euros (2,254.5) with 6.5% ASK growth. Excluding the sold travel agencies, revenue growth was 3.2%.
• Comparable operating result was 55.2 million euros (23.7).
• Operating result was 116.2 million euros (121.7) including the sales gain on one Airbus A350 widebody aircraft (two were sold and leased back in 2015).
• Comparable EBITDAR was 270.4 million euros (231.2).
• Net cash flow from operating activities stood at 219.7 million euros (171.0), and net cash flow from investing activities totalled -499.6 million euros (78.6).**
• Unit revenue (RASK) decreased by 3.5% year-on-year.***
• Unit cost (CASK) decreased by 4.8% and unit cost excluding fuel at constant currency increased by 0.3% year-on-year.
• Ancillary and retail revenue per passenger grew by 15.2% year-on-year to 11.6 euros.
• Earnings per share were 0.55 euros (0.57).
• Outlook: Finnair estimates that, in 2017, its capacity will grow 8-10 per cent, weighted towards the second half of 2017. Revenue is expected to grow more slowly than capacity, reflecting both the increasing capacity in the markets and on the other hand Finnair's efforts to grow the ancillary sales.
• The Board of Directors proposes to the Annual General Meeting that a dividend of 0.10 euros per share be distributed for 2016.

* Unless otherwise stated, figures in parentheses refer to the comparison period, i.e. the same period last year. ** Net cash flow from investing activities includes 168 million euro investments in money market funds and other financial assets maturing after more than three months. These investments are part of the Group's liquidity management *** 2015 revenue includes sales from divested subsidiaries; Estravel was sold in December 2015 and SMT in October 2016.

Outlook

The demand outlook for passenger and cargo traffic in Finnair's main markets continues to involve uncertainty. Finnair estimates that, in 2017, due to the fleet renewal and introduction of new aircraft, its capacity will grow 8-10 per cent, weighted strongly towards the second half of 2017. Revenue is expected to grow more slowly than our capacity, reflecting increasing capacity in the relevant markets.

In keeping with its disclosure policy, Finnair will issue guidance for its expected full-year operational result in connection with the half-year report in July.

CEO Pekka Vauramo:

As a whole, 2016 was a year of growth for Finnair. We successfully launched several new destinations, including Fukuoka and Guangzhou, and added frequencies to key routes. We took delivery of four Airbus A350 widebody aircraft and carried half a million more passengers than a year earlier. Considerable progress was made for example in the digitalisation of our technical processes. Due to the growth, we have also recruited and trained considerable numbers of new personnel, mainly pilots and cabin crew, as previously anticipated. We are building a culture of growth.

In the last quarter, our comparable result was approximately 2 million euros positive, exceeding last year's result by one million euros; hence, we achieved our ninth consecutive quarterly result improvement. The front-loaded training and other expenses resulting from the accelerated growth programme amounted to over 20 million euros in 2016. During the last quarter, we had over 100 pilots tied up in trainings.

Considering the seasonality of our business and the headwinds we faced towards the end of the year, we can be fairly content with our result. Due to delays in some of the A350 deliveries, the training schedule of our pilots for the new aircraft type was interrupted, which forced us to wetlease additional capacity during the quarter in order to ensure the least amount of inconvenience to our customers. This caused additional expenses during the quarter. In addition, we were forced to cancel some flights towards the end of the year.

Finnair's revenue divided by the capacity, or RASK, showed more resilience than that of some of our peers. Ancillary sales continued healthy growth, and our plan to deploy more tourist capacity to Lapland was a success. As an example, Ivalo and Rovaniemi combined are currently the largest destination for our Chinese passengers.

We have specified a target to boost our revenues by 500 million euros by the end of 2019. Ancillary sales, with new revenues streams, will play a key role in achieving this target. We are also expecting the new cargo hub to be completed in 2017, which will enable increased revenue, particularly by providing better facilities for premium services for specialty goods.

This year will be an important leap of growth for us. There will be a tangible increase in capacity, four new A350s and active recruitments. At the same time, we are taking serious efforts to develop the customer experience and the internal people experience. I believe this will lay a solid foundation to launch into the year.

Financial reporting

The publication dates of Finnair's financial reports for 2017 are as follows:

Interim Report 1 January - 31 March 2017: 28 April 2017

Half-Year Report 1 January - 30 June 2017: 20 July 2017

Interim Report 1 January - 31 September 2017: 25 October 2017

FINNAIR PLC Board of Directors

Briefings

Finnair will hold a result press conference on 15 February 2017 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 0800 915 597 (Finland), 0850 510 036 (Sweden), 020 3059 8125 (UK) or +44 20 3059 8125 (all other countries) and quoting "Finnair" to the operator. To join the live webcast, please register at: http://www.investis-live.com/finnair/5889c7ff04323f1100d219ce/7y2ua