Finnair Group interim report 1 January – 31 March 2014

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News Desk 2018

May 7, 2014 at 2:45 AM

Difficult first quarter, continued cost reductions essential Finnair Plc. Interim report 7 May 2014 at 09:30 EET January–March 2014 · Turnover declined by 8.4 per cent to 543.3 million euros (593.2). · The operational result was -34.2 million euros (-17.5). · Net cash flow from operating activities stood at -20.5 million euros ( -11.5), and cash flow from investments totalled 233.6 million euros (-9.2). · Unit cost per available seat kilometre excluding fuel, CASK (CASK excl. fuel) decreased by 0.2 per cent from previous year’s level. · Unit revenue per available seat kilometre (RASK) fell by 4.0 per cent. · Good development in the transatlantic joint business, the company made preparations to begin a joint business for flights between Europe and Japan. · Market outlook for 2014 remain unchanged, Finnair’s result for 2014 will be substantially affected by the result of cost reduction negotiations and employee consultations. CEO Pekka Vauramo: The first quarter of the year is typically Finnair’s weakest, and this year the period was particularly difficult for us. Our turnover declined by 8.4 per cent year-on-year and amounted to 543.3 million euros. The decline in turnover was affected by a slight decrease in overall capacity, continued strong contraction in leisure traffic volume, Asian traffic revenue decline mainly due to exchange rate fluctuations, and a decline in home market demand, particularly in business travel. Cargo traffic continued to suffer from market overcapacity, but there were early signs of a recovery in demand. Our result for the first quarter was very weak: Our operational result declined significantly and showed a loss of 34.2 million euros. This indicates clearly that our cost-reduction program and the measures under our new commercial strategy aimed at turnover growth are absolutely essential. Continuing with cost -reduction measures is inevitable and vital for Finnair’s future. It was a major disappointment that our negotiations with the Finnish Aviation Union (IAU), the Trade Union PRO and the Finnish Flight Attendants' Association (SLSY) under the crisis clause included in the agreements concluded in November 2013 in line with the Finnish Employment and Growth Pact did not lead to any agreement. Negotiations with the Finnish Pilots' Association (SLL) are still ongoing. As Finnair simply cannot bear the current cost structure, I hope we can still reach a mutual agreement on how to save costs. Having to rely on unilateral measures is the final and least pleasant alternative, and we hope to avoid it. The first quarter also included some positives. The results of the transatlantic joint business we began in July 2013 have been very positive. It has also allowed us to accumulate valuable experience for the joint business on flights between Europe and Japan, which began in April. Our operational quality also remained at a high level, and we made efforts to improve the comfort of travel by launching a Business Class seat renewal and replacing the last of our Boeing 757 aircraft with new Airbus 321 Sharklet aircraft. We will continue the renewal of our service concepts this year while also making preparing for the renewal of our long-haul fleet starting next year. However, our future growth depends significantly on how well we succeed in achieving our cost reduction target. Only a profitable Finnair can grow. Outlook for 2014 remains unchanged The ongoing uncertain economic outlook in Europe and Asia is contributing to weak consumer demand in some of our main markets. Air traffic is expected to grow moderately in 2014. Finnair, however, will not be able to benefit from that growth without progress in its cost savings program and its target cost structure in place. Finnair estimates its turnover to be close to the previous year’s level in 2014. Fuel costs are expected to remain high. The outcome of Finnair's ongoing employee consultations and cost-saving negotiations will have a significant impact on financial performance in 2014, and therefore the company will reconsider giving guidance for its full-year 2014 financial performance after the savings negotiations have been concluded. Financial reporting 2014 Finnair’s Interim report for 1 January – 30 June 2014 will be published on Friday 15 August 2014 and the Interim report for 1 January – 31 September 2014 on Friday 31 October 2014. This is a summary of Finnair's January-March 2014 Interim report. The Finnair Group Interim report 1 January – 31 March 2014 is attached to this release in pdf format and is also available on the company’s website at www.finnairgroup.com. Finnair Plc. Board of Directors Briefings Finnair will hold a press conference on 7 May 2014 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 for analysts will begin at 4:00 p.m. Finnish time. The conference may be attended by dialling your local access number +358 800 770 306 and using the PIN code 255856# For further information, please contact: Chief Financial Officer Erno Hilden, tel. +358 9 818 8550, erno.hilden@finnair.com Financial Communications and Investor Relations Director Mari Reponen, tel. +358 9 818 4054, mari.reponen@finnair.com Investor Relations Officer Kati Kaksonen, tel. +358 9 818 2780, kati.kaksonen@finnair.com, Distribution: NASDAQ OMX Helsinki Principal media

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