Finnair Group Interim Report 1 January 30 June 2008

Finnair Group Interim Report 1 January 30 June 2008 1 08/08/2008 Presentation name / Author

Airline industry at a historical turning point Fuel price has a stranglehold on the business Average ticket prices have not kept up with costs More efficiency required from airlines Weak companies are dumping prices to ensure shortterm cash flow, weakening the profitability of the industry More bankruptcies and mergers Risk of new subsidy interferences 2 08/08/2008 Presentation name / Author

Cold winter ahead Lufthansa result drop 29% Ryanair result drop 85% British Airways result drop 90% Air France-KLM result drop 53% Iberia result drop 85% Cathay Pacific result drop into the red Finnair result drop 81% All airlines are cutting capacity Personnel cuts all around Capacity decrease also from bankruptcies 3 08/08/2008 Presentation name / Author

Expensive fuel and low load factors spoiled the quarter Finnair s operational result clearly weakened from last year s second quarter Poor load factors Unit revenues for flight operations down 2.2 per cent per tonne kilometre Fuel costs up by 37.6 per cent Unit costs were clearly down despite expensive fuel 50 million euro efficiency programme Demand for cargo remains strong Punctuality improved significantly in April-June 4 08/08/2008 Presentation name / Author

Finnair s second quarter clearly weaker than previous year Q2/2008 Q2/2007 Change % Turnover mill. 546.1 538.1 Adjusted EBITDAR* 54.0 74.0 Adjusted EBIT* 5.2 27.2 One off items/ capital gains 2.9 5.0 Fair value changes of derivatives 12.6 4.9 Operating profit/loss (EBIT) 20.7 37.1 Profit for period 13.9 25.8 1.5-27.0-80.9 - - -44.2-46.1 *excl. capital gains, fair values changes of derivatives and non recurring items 5 08/08/2008 Presentation name / Author

Strong cash balance, weakened cash flow Cash flow January-June Cash flow statement (EUR mill.) Q2/2008 Q2/2007 Cash flow from operations 87 114 Investments and sale of assets -109-204 Investments -145-245 Change of advances and others 36 41 Cash flow from financing -81 46 Change in liquid funds -103-44 Liquid funds at the beginning 540 294 Liquid funds at the end with financial interest bearing assets at fair value 437 250 6 08/08/2008 Presentation name / Author

Strong balance sheet % 120 Equity ratio Adjusted Gearing 100 80 60 40 20 0 2002 2003 2004 2005 2006 2007 Q2 2008 7 08/08/2008 Presentation name / Author

Unit costs dropped Q2/08 Q2/07 Unit costs of flight operations* c/atk -4,6% -3,8 % Unit costs of flight operations excl. -12,9% -5,3 % fuel* c/atk Personnel expenses c/atk -8,7% -5,0 % Fuel costs c/atk +22,5% +1,3 % Traffic charges c/atk -5,5% -3,1 % Ground handling and catering +21,2% +3,3 % /passenger Sales and marketing /passenger +3,9% +7,3 % Aircraft lease payments and -13,6% -14,4 % depreciation c/atk Other costs c/atk -20,5% -2,9 % * excluding fair value changes of derivatives and non-recurring items ATK = Available Tonne Kilometre 8 08/08/2008 Presentation name / Author

Unit costs decreased still more than yield Change YoY 15 % Yield (EUR/RTK) Unit costs (EUR/ATK) 10 5 0-5 -10-15 -20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2002 2003 2004 2005 2006 2007 2008 9 08/08/2008 Presentation name / Author

Productivity improved 590 Productivity (incl. Aero) (ATK/person) 12 m rolling sum 540 490 440 390 340 290 240 01.02 04.02 07.02 10.02 01.03 04.03 07.03 10.03 01.04 04.04 07.04 10.04 01.05 04.05 07.05 10.05 01.06 04.06 07.06 10.06 01.07 04.07 07.07 10.07 01.08 ATK 1000/person 10 08/08/2008 Presentation name / Author

Despite business growth, number of staff stable Personnel 14000 Personnel on average 12000 10000 8000 6000 4000 2000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Q2 2008 11 08/08/2008 Presentation name / Author

Challenges have been met in difficult conditions Period Issue Change Level of challenge H107 Telephone service Customer feedback Over 90% answered in under 1 minute H207 Baggage delays Number of delays cut to a third 1 2 Q208 Passenger load factors down 62% => 79% 3 H108 Flight delays From 18th position to 5th position 4 H208 Fuel price vs. ticket prices 5 12 08/08/2008 Presentation name / Author

Efficiency programme underway Decision made on 50 million euro efficiency programme Result effect visible next year Personnel cuts at most 500 people Main efficiency improvement areas: Capacity adjustment / discontinuing unprofitable flights Effect on staff and variable costs Partners pricing and deepening cooperation Fuel burn / flight procedures Support functions and business unit interfaces 13 08/08/2008 Presentation name / Author

Load factors back to normal levels July traffic performance Scheduled traffic increased 6% Scheduled traffic passenger load factor 79% Leisure traffic passenger load factor 90% Asian demand grew by 12% in July, load factor 80%, cargo 20% 14 08/08/2008 Presentation name / Author

Growth in Asian traffic continues Seoul launched as new destination in June Asian demand grew 18.8% in January- July, cargo loads by 31.6%, despite travel restrictions in China 65 flights a week to Asia in the summer Non-stop flights to 11 destinations, daily to six India up to 13 flights per week Guangzhou on winter break 15 08/08/2008 Presentation name / Author

More revenues from Asian traffic Distribution of passenger and cargo revenues in scheduled traffic Domestic Europe Asia US 4% 13% 41% Aasia- Asia-Europe Eurooppa Via gateway Helsinki >50 >50% % 42% 16 08/08/2008 Presentation name / Author

Long-haul network in summer 2008 7 New York Tokyo 4 Nagoya 4 Seoul 5 Osaka 7 Beijing 7 Shanghai 7 Hong Kong 7 Guangzhou 4 Bangkok 7 Delhi 7 Mumbai 6 17 08/08/2008 Presentation name / Author

Fuel price still on a high level 18 08/08/2008 Presentation name / Author

Fuel costs H1/2007 vs. H1/2008 MEUR 400 300 111-11 -38-24 200 33 278 100 207 0 H1/2007 Volume Price Flynordic Currency Hedging H1/2008 Fuel hedging outside hedging calculations: H1/Y2007-5 MEUR ja H1/Y2008 +13,5 19 08/08/2008 Presentation name / Author

Fuel costs clearly over a quarter of turnover 2003: 10.2% of turnover 2004: 12.5% of turnover 2005: 15.6% of turnover 2006: 19.4% of turnover 2007: 20,2% of turnover 2008: >27% of turnover Finnair scheduled traffic has hedged 70% of its fuel purchases for the next six months, thereafter for the following 24 months at a decreasing level. A change of 10 per cent in fuel price between August-December will affect Finnair s 2008 result by over 10 million euros at the current hedging rate. 20 08/08/2008 Presentation name / Author

Fuel hedging rates (Scheduled Passenger Traffic, 30 June 2008) 100% 75% 70% 71% 50% 25% 0% 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 21 08/08/2008 Presentation name / Author

Outlook Outlook weakened by volatility of oil price and short booking horizon Dramatically increased fuel costs cannot be added on ticket prices for now Announced industry capacity cuts approximately 7%, surplus capacity will also disappear with bankruptcies Finnair Scheduled Passenger Traffic capacity will increase by approximately 5% in H2 (H1 > 10%) At current expectations latter part of year operating result may be loss-making 22 08/08/2008 Presentation name / Author

Appendices 23 08/08/2008 Presentation name / Author

Quarterly change in profitability MEUR Change in EBIT per quarter (Excluding capital gains, fair value changes of derivatives and non recurring items) 60 50 40 30 20 10 0-10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2-20 -30-40 -50 2002 2003 2004 2005 2006 2007 2008 24 08/08/2008 Presentation name / Author

Average yield and costs EUR c/rtk & EUR c/atk 120 Yield (EUR/RTK) Unit costs (EUR/ATK) 100 80 60 40 20 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2002 2003 2004 2005 2006 2007 2008 25 08/08/2008 Presentation name / Author

Segment results Excluding capital gains, fair value changes of Derivatives and non restructuring items 2008 2007 Q2 Q2 MEUR Scheduled Passenger Traffic 1.9 27.7 Leisure Traffic -2.5 1.1 Aviation Services 4.4 1.3 Travel Services 1.4 1.2 Unallocated items 0.0-4.1 Total 5.2 27.2 26 08/08/2008 Presentation name / Author

Segment results Excluding capital gains, fair value changes of Derivatives and non restructuring items 2008 2007 Q1-Q2 Q1-Q2 MEUR Scheduled Passenger Traffic 1.5 27.4 Leisure Traffic 8.6 6.7 Aviation Services 6.9 4.6 Travel Services 1.8 2.5 Unallocated items -2.5-8.2 Total 16.3 33.0 27 08/08/2008 Presentation name / Author

Q4 2007 Q1 2008 Q2 2008 Q2 2007 Q3 2007 ROE and ROCE Rolling 12 months % 16 ROE ROCE 14 12 10 8 6 4 2 0-2 -4 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 28 08/08/2008 Presentation name / Author

New aircraft enable future growth In 2007-14 a fleet of up to 15 Airbus A330/A340 aircraft Boeing MD-11 fleet will be phased out by March 2010 In 2014-16 a fleet of up to 15 new technology Airbus A350XWB aircraft 29 08/08/2008 Presentation name / Author

Most modern European fleet Average age of Finnair s European fleet approximately five years 29 Airbus A320 family aircraft Ten smaller Embraer 170- eight larger 190 model aircraft already in the fleet, three arriving 2009-2011 New aircraft have increased flexibility, improved load factors, reduced costs and are eco-efficient 30 08/08/2008 Presentation name / Author

Investments and cash flow from operations MEUR 350 Operational net cash flow Investments 300 250 200 150 100 50 0 2002 2003 2004 2005 2006 2007 Q1-Q2 2008 31 08/08/2008 Presentation name / Author

Aircraft operating lease liabilities MEUR 600 Flexibility, costs, risk management 500 400 300 200 100 0 2002 2003 2004 2005 2006 2007 Q2 2008 On 30 June all leases were operating leases. If capitalised using the common method of multiplying annual aircraft lease payments by seven, the adjusted gearing on 30 June 2008 would have been 38,8% 32 08/08/2008 Presentation name / Author

Finnair Financial Targets Sustainable value creation Operating profit (EBIT) EBITDAR Economic profit Adjusted Gearing Pay out ratio EBIT margin at least 6% => over 120 mill. in the coming few years EBITDAR margin at least 17% => over 350 mill. in the coming few years To create positive value over pretax WACC of 9,5% Gearing adjusted for aircraft lease liabilities not to exceed 140 % Minimum one third of the EPS 33 08/08/2008 Presentation name / Author

Finnair s Financial Targets Description of targets Operating profit (EBIT) Turnover + other operating revenues operating costs EBITDAR Economic profit Adjusted Gearing Pay out ratio Result before depreciation, aircraft lease payments and capital gains Operating profit EBIT Weighted Average Cost of Capital Interest bearing debt + 7*Aircraft lease payments liquid funds) / (Equity + minority interests) Dividend per share / Earnings per share 34 08/08/2008 Presentation name / Author

www.finnair.com Finnair Group Investor Relations email: investor.relations@finnair.com tel: +358-9-818 4951 fax: +358-9-818 4092 35 08/08/2008 Presentation name / Author