Finnair Oyj - Quarterly report

Finnair Group interim report 1 January – 31 March 2014

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

Attachments:

05077321.pdf