Finnair Group Financial Statements Bulletin 2015

Finnair Plc. Financial Statement Release 10 February 2016 at 09:00 EET

Improvement of result continued and final quarter was slightly positive - full-year operational result 23.7 million euros

October-December 2015

• Revenue grew by 5.9% year-on-year to 585.5 million euros (552.7).
• Operational result was 0.8 million euros (-9.3).
• Operational EBITDAR was 59.5 million euros (43.5).
• Net cash flow from operating activities stood at 7.1 million euros (-15.7), and cash flow from investments totalled -7.8 million euros (-111.9).
• Unit cost at constant currency excluding fuel (CASK excl. fuel) increased by 1.2% year-on-year.
• Unit revenue at constant currency (RASK) decreased by 1.1% year-on-year.
• Ancillary service revenue per passenger grew by 27.3% year-on-year to 11.22 euros per passenger.
• Earnings per share amounted to 0.44 euros (-0.38).

January-December 2015

• Revenue grew by 1.7% year-on-year to 2,324.0 million euros (2,284.5).
• Operational result was 23.7 million euros (-36.5).
• Operational EBITDAR was 231.2 million euros (176.6).
• Net cash flow from operating activities stood at 171.0 million euros (24.2), and cash flow from investments totalled 78.6 million euros (14.4).
• Unit cost at constant currency excluding fuel (CASK excl. fuel) increased by 0.6% year-on-year.
• Unit revenue at constant currency (RASK) decreased by 1.0% year-on-year.
• Earnings per share amounted to 0.57 euros (-0.71).
• Ancillary service revenue per passenger grew by 23.7% year-on-year to 10.16 euros per passenger.
• Outlook: Despite 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.
• The Board of Directors proposes to the Annual General Meeting that no dividend be distributed for 2015.

CEO Pekka Vauramo:

We achieved a positive operational result at Finnair for the full year as well as for the seasonally weak fourth quarter: the operational result for the final quarter of the year was 0.8 million euros, and the operational result for the full year was 23.7 million euros. This marks the fifth consecutive quarter when we improved our performance year-on-year.

We are heading in the right direction, and we will now look to accelerate our profitable growth. We hit a new record in the number of passengers: more than 10 million passengers flew with us in 2015. Our revenue for the full year increased by 1.7 per cent, to 2,324 million euros, and our growth rate in the fourth quarter was higher than five per cent as our roll-out of A350 aircraft saw us move to a new phase of growth.

The final quarter included some unusual expenses and occasional market turbulence, which somewhat weighed down the result of our Airline Business segment. However, our Travel Services achieved a good result in the same period. Ancillary service revenue reached a growth rate of 41.5 per cent in the fourth quarter and exceeded 100 million euros for the year.

The fall in fuel prices, which began slightly over a year ago, continued. Nevertheless, its impact is not yet fully reflected in our result due to our hedging policy. For this reason, we estimate that our fuel costs will decline further in the coming quarters in spite of increasing traffic volume, which will support our performance in 2016. Our goal is profitable growth, which requires not only revenue growth through the introduction of new routes, but also a constant focus on developing our services in a cost-efficient manner.

The new A350 aircraft have proved to be very good, and the entire Finnair organisation has worked hard with the new aircraft to ensure a unique Nordic experience. Our new wide-body aircraft are the engine of our growth, and they support the strategic growth of our traffic, particularly in Asia, from this year onwards. The growth of our long-haul capacity will also create a need for increased feeder traffic capacity between Helsinki and our European destinations.

Our growth is also bringing new jobs to Finnair: Last year, we announced we will offer approximately 1,000 new jobs by 2020. In 2015 we already recruited the first 200 new Finnair employees to join our flight personnel, and we are currently in the process of recruiting a total of 450 new employees including pilots, cabin crew and ground service personnel.

Our investment program reaches its peak this year as we take delivery of four new A350 aircraft. We have prepared for this by strengthening our financial position. In October, we issued a 200 million euro hybrid bond. We also signed sale and leaseback agreements for two A350 aircraft, and we intend to conclude similar agreements this year and the next, which will provide us with more than half a billion euros in financing. Our cash flow from operating activities was very strong in the fourth quarter, and our liquid funds stood at over 700 million euros at the turn of the year. Early in the year 2016, we secured financing for our third new A350 aircraft in a cost-efficient manner for its full market value. We are in a stable position and moving in the right direction, ready to pursue growth.

Outlook

Despite 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. In accordance with its disclosure policy, Finnair will issue guidance for its expected full-year operational result in connection with the January-June interim report.

Financial reporting and Capital Markets Day

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

Interim report 1 January - 31 March 2016: 12 May 2016

Interim report 1 January - 30 June 2016: 17 August 2016

Interim report 1 January - 30 September 2016: 26 October 2016

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 10 February 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~20160210